Stablecoins Galore

Several big announcements this morning: Gemini, headed by the Winklevoss twins, announced that they had received approval to issue its first cryptocurrency, a stablecoin called the Gemini Dollar (“GD”). Designed to facilitate the use of cryptocurrency as a medium of exchange, each GD will be backed by a US dollar, “in order to give it the stability of the fiat currency and the speed and borderless nature of a cryptocurrency”. Notable in this announcement is a partnership with State Street Bank, which will hold the cash deposit account tied to the GD. Gemini also acquired a crypto custody patent last week (link here).

Over the past year, several stablecoin projects have raised capital including Basis, Reserve and Carbon. Also announced today by itBit (the 50th largest crypto exchange in the world): a stablecoin initiative and related regulatory approval. In last week’s newsletter, I linked to the funding announcement for Continue reading "Stablecoins Galore"

Drinking from a Firehose

The pace of news announcements over the last week shows the blockchain sector hasn’t received the August doldrums memo. Overall crypto markets improved, with Bitcoin hovering near $7000. Many other cryptocurrencies have seen more modest recoveries. NEO, often touted as China’s Ethereum, ends August with a 40% decline, the worst performing “large cap” currency of the month.

Behind the scenes, we’ve seen much development progress. Filecoin, which had one of the largest ICOs of 2017, published its quarterly update with its first demos. The World Bank exceeded its $73M target for its first blockchain settled bond, raising $81M from investors that included Northern Trust. Enigma, which spun out of MIT and raised a $45M ICO last year, announced 8 launch partners for its encrypted “secret contracts” platform. Privacy is one of the hot topics in the cryptocurrency world, with several different approaches including Monero, ZCash and Blockstream’s Confidential Transactions. I’m Continue reading "Drinking from a Firehose"

Crypto, Identity & the Need for Self-Sovereignty

Last week I wrote about how geopolitics can impact demand for public blockchain cryptocurrencies such as bitcoin. Cryptocurrency can serve as a (relatively) stable store of value when local currencies are devalued or taken out of circulation – most recently witnessed in Turkey.
In Venezuela, where citizens have flocked to bitcoin in light of hyperinflation, the government countered by announcing a state-controlled cryptocurrency called the petro. President Nicolas Maduro claimed to have raised over $700M for the oil-backed coin in February, although that account has not been verified. The petro also does not trade on any exchanges. Last Friday, he announced new economic measures as the IMF warned that Venezuela’s inflation could hit 1 million percent by the end of 2018:

Flights to Safety

Financial headlines over the past week focused on Turkey’s rapidly depreciating lira. Meanwhile many citizens there, ignoring President Erdogan’s calls to exchange gold and foreign currencies to local currency, tapped into the crypto market:
Bunyamin Yavuz, a cardiologist in Ankara, said he no longer trusts local banks and now buys XRP, monero, lumens, among other cryptocurrencies as part of his investment portfolio. Yavuz told CoinDesk his holdings now consist of 30 percent cryptocurrencies, 20 percent U.S. dollars, and just 10 percent lira.” – Coindesk (August 10, 2018)
Bloomberg News reported this morning that the Turkish lira showed more volatility over the past week than bitcoin had. This “flight to safety” to crypto markets has played out throughout the world over the past few years.
I was in India during demonetisation in November 2016. Overnight, Prime Minister Modi mandated that 500 and 1000 Rupee notes were to be taken Continue reading "Flights to Safety"

ICE Heats up the Sector

The big news this morning is that Intercontinental Exchange, parent of the New York Stock Exchange, announced the formation of a new company, Bakkt, a global platform to allow consumers and institutions to buy, hold and store digital assets. Its first use cases will be for trading and conversion of Bitcoin versus fiat currencies. Partners include Microsoft, Starbucks and BCG:

“ ‘In bringing regulated, connected infrastructure together with institutional and consumer applications for digital assets, we aim to build confidence in the asset class on a global scale, consistent with our track record of bringing transparency and trust to previously unregulated markets,’ said Jeffrey C. Sprecher, Founder, Chairman and CEO of Intercontinental Exchange.

As an initial component of the Bakkt offering, Intercontinental Exchange’s U.S.-based futures exchange and clearing house plan to launch a 1-day physically delivered Bitcoin contract along with physical warehousing in November 2018, subject to CFTC Continue reading "ICE Heats up the Sector"

Crypto-market Efficiencies?

Last week in NYC I shared a panel with Valerie Szczepanik, SEC’s “crypto czar”. We had a wide-ranging discussion on self-regulation, utility tokens, the SEC’s role in protecting investors, and accredited investor definitions. While the conversation was under Chatham House Rules and I can’t discuss her specific comments in this newsletter, she is very open to collaboration with the crypto community, while being clear that the SEC continues to actively investigate token offerings for potential violations of current securities laws.

Coinbase had several announcements over the past couple of weeks, including one that generated a fair amount of controversy: posting that they were considering adding 5 tokens to their exchange. In December, Coinbase was criticized for potential insider trading/leaks when they added Bitcoin Cash to their exchange. It seems they are trying to get ahead of this with this announcement (and protecting themselves when they list job postings for Continue reading "Crypto-market Efficiencies?"

Dog Days of Summer

As the United States celebrated its Independence Day on July 4th, several jurisdictions around the world, including South Korea, Bermuda and Malta, passed legislation to support crypto assets and virtual currencies. Of these, South Korea’s appears the most detailed by providing a classification scheme as a framework for regulation. This is the most sophisticated understanding of the blockchain sector I have seen to date from a government:

“The government has subdivided its industry classification scheme into three sectors, with ten further subdivisions under the guidance of the Korean Standard Industrial Classification ( KSIC ). The subdivisions include detailed considerations of blockchain-powered infrastructure for DApps such as EOS , Ethereum and NEO , blockchain-based cloud computing services, and cryptocurrency mining.The survey is also covering blockchain systems integration into existing industries, including the financial sector, security, insurance, copyright management, supply chain management, medical services, and software development.” — Cointelegraph, Continue reading "Dog Days of Summer"

Becoming Un-Tethered

I just wrapped up 2 days of speaking at MoneyConf in Dublin, an annual conference dedicated to all things fintech. In contrast to previous years, at least 50% of the programming involved blockchain technology. I shared the stage with two early FPV portfolio companies, Blockchain and Bitpesa, and connected with a number of old friends in the sector, including Ethereum co-founder Joe Lubin, academic and entrepreneur Emin Gun Sirer, and Circle founder Jeremy Allaire. We talked about the sector’s growth and challenges, tokenization, and regulation. There was little hype, real conversation and hyper-focus on overcoming current challenges and building what’s next. It was refreshing to be amongst the early adopters who keep it real, and I came away more convinced than ever that we’re in good hands…

The big news over the past couple of days was new research that linked stablecoin Tether to Bitcoin price manipulation :

“ Using Continue reading "Becoming Un-Tethered"

ICOs 2.0

Blockchain Week 2018 came in with a bang — 8500 attendees at the Consensus conference (vs 400 the last time I spoke there in 2015), thousands more at side events. The price of major cryptocurrencies saw a run up to the week, with vivid memories of the boom last year’s conference started. However, the prices soon came down, with Bitcoin trading near $7500 recently.

While the price may have disappointed, news continued to flow. Over the past few weeks:

  • Institutional grade security was high on announcement lists with Coinbase, Bitgo, and hardware wallet Ledger all announcing new custody products aimed at larger investors
  • Coinbase continued its acquisition spree, buying Paradex, a decentralized exchange (DEX — discussed in one of our newsletters earlier this year). This signals a closer move to offering altcoin trading, as Paradex focuses on the ERC-20 tokens that most initial coin offerings (ICOs) are built on
  • The Continue reading "ICOs 2.0"

The Calm Before Blockchain Week NYC

I am back in NYC after a trip around the world — with stops in London, Mumbai, Beijing, Korea, Los Angeles and Palo Alto along the way. I wrote about London and India observations in the last newsletter. A few takeaways on the rest:

Last time I spoke at the Milken Conference in LA, in 2015, I was on a panel to discuss the promise of blockchain technology. We were the only panel addressing the topic, and while it was standing room only, there was little knowledge amongst the audience about bitcoin and blockchain. This year I counted at least 5 sessions related to blockchain and cryptocurrency, with much more engagement and heated opinions…in fact Bill Barhydt, CEO of FPV portfolio company Abra went head to head with economist Nouriel Roubini and wrote about it after in this piece.

Built Environments and Blockchain Tech

After a few days in Mumbai meeting with large industrials and regulators (and FPV portfolio company Everledger which just opened a Mumbai office), I spent the past couple of days in London, where I spoke at the World Built Summit, an annual conference convened by RICS, the Royal Institution of Chartered Surveyors. RICS is one of the world’s leading professional bodies for qualifications and standards in land, property and construction (currently in 140 countries) and was established in 1868 by a group of surveyors in London, to respond to a lack of regulatory frameworks during the Industrial Revolution. Interesting parallels to the current state of the cryptoasset market.

I spoke at several sessions, including one on the Future\Perfect Ventures thesis of IoT, machine learning and blockchain convergence, and how these technologies can impact the “built environment”. Perhaps the most lively of the sessions was one I led on regulation. It Continue reading "Built Environments and Blockchain Tech"

Campus Crypto Fever

This past Friday I spoke at Penn’s inaugural Blockchain Conference. It was a special speaking engagement for me, as I am a Penn grad and my interest in economics and business started and flourished there.

Over the past five years speaking on college campuses, I have encouraged students to explore the blockchain sector. During the past year, I have received hundreds of emails from students in those audiences, some expressing regret for not paying attention sooner, and others thankful I helped them pay off their loans, or find a career path. Given this, I expected a lot of interest and engaged students at the Penn conference. My expectation was met and exceeded. From students studying cryptoeconomics to faculty guiding independent studies on the new asset class, it is clear that the oldest university in the United States is on board with the newest technology wave.

What were students most interested Continue reading "Campus Crypto Fever"

The Big Chill

The first quarter was not a pretty one for cryptocurrency prices — from January 1-March 31, Bitcoin lost over 50% of its value, with a number of smaller altcoins down over 60%. Regulatory action, hacks and scams weighed heavily, with newer investors who came in during the gold rush of Q4 heading for the exits. Are we headed for another cryptowinter, as what happened in 2014–2016? During that time, in the wake of the Mt Gox hack and Silk Road scandal, Bitcoin prices fell and stayed there consistently until March 2017, when Japan’s regulators ruled that Bitcoin could be used as a currency.

Much is different this time around — the underlying technologies underpinning cryptoassets continue to develop at a rapid pace; more enterprise projects are pinpointing use cases of blockchain technology (and just as importantly, which ones don’t make sense); and institutional capital has entered the asset class. In Continue reading "The Big Chill"

Crypto Chess Continues

“Welcome to #Malta @binance,” Joseph Muscat, the country’s prime minister, tweeted on Friday. “We aim to be the global trailblazers in the regulation of blockchain-based businesses.”

Binance, one of the world’s largest cryptoasset exchanges by volume, announced this past week that it moved its headquarters from Hong Kong to Malta. This move came on the heels of Japan reaching out to the Binance with a warning for operating without a license there, and Hong Kong regulator Securities and Future Commission (SFC) warning crypto exchanges not to trade digital assets defined as securities (similar to the US SEC’s warning to unlicensed exchanges earlier this month).

Binance, which has a broad listing of “altcoins” (smaller cryptocurrencies) with over 250 trading pairs, also recently announced it was developing a decentralized exchange. Decentralized exchanges (DEXs) have proliferated over the past few months — they allow trades to occur between users peer to peer Continue reading "Crypto Chess Continues"

Lightning Strikes the Sector

I took a hiatus from the newsletter last week, while meeting with entrepreneurs and speaking at SXSW in Austin. Similar to what I saw (at the very different gathering) at Davos in January, much of the conference chatter revolved around blockchain technology. Almost on cue, last Sunday night John Oliver broadcast an episode (link below) focused on cryptocurrencies and blockchain. If you haven’t seen it and want a good laugh while gaining a better cultural understanding of the sector, I’d encourage you to watch it!

Ahead of more regulatory concerns, cryptocurrencies entered a bear market (with Bitcoin down to $7200 and Ether near $500) this past week before recovering earlier today on a statement that the FSB did not see cryptocurrencies as a risk to the global financial system. This news came as the G20 Summit got underway in Buenos Aires — many had expected a more heavy handed approach Continue reading "Lightning Strikes the Sector"

Securities Tokens

In the past week, more news started to emerge about the SEC subpoenas that I alluded to in last week’s newsletter. While it remains to be seen what the SEC plans to do with the information, it is clear that they are signaling to the market that they are serious about investigating practices over the past year and will be using that information to, at the least, provide more concrete guidance moving forward.

These recent regulatory probes have led to a new class of cryptocurrencies: the security token. While definitions vary, with the broadest being that this category would encompass a token that is issued in compliance with current securities laws (including disclosures), some companies are looking at how the secondary market, in addition to the issuance, can be compliant without hindering liquidity. Harbor, one of the newer companies to emerge in this space, is looking to utilize smart contracts Continue reading "Securities Tokens"

Personal Reflections on 2017

As 2017 comes to a close, I think of it as the year of validation and gratitude, personally and for so many people around the world who have been marginalized and silenced in so many different ways. A year of validation for those who have lived as minorities in a world that has valued and listened to the majority voice –the status quo, the male, the white person.

 

What happened this year was a reckoning, when collectively minorities decided to voice their experiences so that they could no longer be ignored or viewed as one-offs.  Every professional woman I know has been sexually harassed.  Many to the point of giving up on their careers.  The amount of lost talent and productivity from this is staggering to think of.

 

I was lucky – I was born to persevere and grew up with parents who told me Continue reading "Personal Reflections on 2017"

Bitcoin at $10K – The Beginning

The price of bitcoin reached $10K earlier today.  Over the years I have seen a significant change in conversations around virtual currencies (“it’s for drug dealers!”; “there’s no underlying asset!”; “it’s a fraud!” to “how do I buy bitcoin”?;“can you help me look at this ICO?”) and we are no doubt at the cusp of more widespread acceptance of the concept.  It’s important to note that a fair amount of the recent capital in the market is driven by speculation from the astronomical returns that cryptocurrencies have achieved in 2017, and a “fear of missing out” (FOMO).  True alpha returns have been difficult to achieve in the globally low interest rate environment and softening of many real estate markets, all factors that have been fuel for cryptocurrency market cap growth.  Many of these investors have not experienced the price volatility many Continue reading "Bitcoin at $10K – The Beginning"

Blockchains and Society

In July, I sat down The Falkes Group, organizers of the annual Women’s Private Equity Summit in Half Moon Bay, to talk about my fund, and how I got interested in investing in bitcoin and blockchain technology in 2013.

As we see bitcoin near $6000 (it was near $1000 in the beginning of this year), it’s important to remember that there are still many question marks on how the technology will develop, particularly as we see more cryptocurrencies come to market. The pace of growth in the blockchain sector has exceeded what those of us who got involved in 2013 (or earlier) could have predicted. I think it is a testament to pent-up demand for better mechanisms for value transfer, authentication, and security. As if on cue, Equifax recently showed us how a large, well funded company whose sole job it was to protect our data, failed at its basic Continue reading "Blockchains and Society"

Blockchains and Society

In July, I sat down The Falkes Group, organizers of the annual Women’s Private Equity Summit in Half Moon Bay, to talk about my fund, and how I got interested in investing in bitcoin and blockchain technology in 2013.

As we see bitcoin near $6000 (it was near $1000 in the beginning of this year), it’s important to remember that there are still many question marks on how the technology will develop, particularly as we see more cryptocurrencies come to market. The pace of growth in the blockchain sector has exceeded what those of us who got involved in 2013 (or earlier) could have predicted. I think it is a testament to pent-up demand for better mechanisms for value transfer, authentication, and security. As if on cue, Equifax recently showed us how a large, well funded company whose sole job it was to protect our data, failed at its basic Continue reading "Blockchains and Society"