FOMO in Washington DC: Mnuchin, Trump and Tomorrow’s Libra Hearing

The last time I wrote was on the eve of Facebook’s cryptocurrency Libra announcement. At this time tomorrow, the US Congress will have held its first hearing on the matter. It’s been quite an active few weeks – Bitcoin reached highs over $13K at one point before retreating back to the $10K mark (still nearly 3x higher than its lows earlier this year). The SEC provided more guidance on crypto custody (echoing much of what was said in FinCEN’s guidance which I covered back in May) and qualified the first Reg A blockchain offerings.

However, all eyes are on Washington DC, with US Secretary Treasury Steve Mnuchin calling a press conference today to express Treasury’s view on digital assets and in particular the Libra token. You can watch a video of his remarks here.

He reiterated his previous stance on concerns over money laundering but did note that

Treasury Continue reading “FOMO in Washington DC: Mnuchin, Trump and Tomorrow’s Libra Hearing”

Facebook’s Libra Launch

The big news heading out of last week and into the upcoming week is Facebook’s long-awaited GlobalCoin (or Libra Coin), likely to be a stablecoin pegged to a basket of global currencies. Details of its initial consortium leaked late last week – industry website The Block broke the news of members who are contributing $10M each – these include Visa, Mastercard, Coinbase, Spotify, Women’s World Banking, Paypal, eBay, Farfetch, Mercado Libre, PayU, Stripe, Lyft and Uber. While more details will be revealed on June 18th, the listed members are expected to be operating “nodes’ on the network and will earn fees in return for validating transactions. A Facebook subsidiary called Calibra is also expected to run one of the nodes. Given recent regulatory scrutiny, it’s not a surprise that Facebook is building out a consortium to appear as decentralized as possible. A big question yet to be answered is who Continue reading “Facebook’s Libra Launch”

Blockchain Week Bull Run

Unlike last year’s NYC Blockchain Week, which was more form over substance (anyone recall Lambos parked in front of the Hilton?), this year’s conferences focused on the progress that had been made over the past year and the future promise of the sector as institutions prepare their entries.
While bitcoin’s price experienced a significant price hike from May 8 through the end of the week (albeit at one point retreating back to $7K before reaching $8K again), there was other noteworthy news.
Amazon Web Services, used by many tech startups and larger companies for their cloud infrastructures, announced the expansion of its Blockchain as a Service offering. Microsoft announced the first decentralized identity infrastructure implementation by a major tech company built directly on the bitcoin blockchain (most have built on top of ethereum or private blockchains). While Microsoft continues to work with the ethereum blockchain for other projects, I Continue reading “Blockchain Week Bull Run”

FinCEN Weighs In

Greetings from the very beginning of NYC Blockchain Week. This is where it all started just two years ago, when ETH and BTC prices began their meteoric rise in 2017, soon to be followed by the ICO boom and bust. The feeling is less frothy and more realistic, but just as exciting in my opinion. We’ve already lived through a major cycle in these past two years, and the energy I see reflects the building that’s been happening over the past year. As if on cue, BTC prices are back over $6000 and not negatively impacted by the news of the Binance hack — Taiwan-based Binance is the largest crypto exchange in the world by volume.
Speaking of which, up until this morning, the Binance hack was the biggest news to hit the sector in the past week. However, this morning FinCEN (the US Treasury Financial Crimes Enforcement Network) released Continue reading “FinCEN Weighs In”

Days of Reckoning

The past couple of weeks have seen a flurry of activity in the blockchain and crypto markets:

  • Yesterday, the WSJ published an investigative report that looked at money laundering in the crypto world. Of over $88M of illicit funds it tracked, $9M went through Swiss based exchange Shapeshift. Perhaps related to this investigation, Shapeshift announced a few weeks ago that it would require registration on its exchange. While 2017 was truly the “Wild West”, the growth of the sector (and its reluctance to self regulate) has led to the 2018 being the year of reckoning and increased scrutiny…
  • Bitmain, the world’s largest crypto mining company, filed for its IPO on the Hong Kong stock exchange. While the company’s numbers reflect massive growth in 2017 from the crypto bull market, the prospective also noted $1B of surplus inventory due to slowdown in the market as well as a loss from its Continue reading “Days of Reckoning”

The Stage is Being Set

As much of the crypto world descended upon Manhattan for Consensus:Invest this past week, it was a different atmosphere than a year ago, when bitcoin was on its way to $20,000. Many cryptos were down 90% from all-time highs, with Bitcoin and Ether both off 80%+. Gone was the euphoria and any talk of “lambos” to an environment which I prefer – where tourists are gone and the real builders and investors remain. Instead of party-hopping, attendees had more substantive conversations about the future. The usual barrage of press releases trickled to a few.
In his fireside chat with Silver Lake co-founder Glenn Hutchins,, SEC Chairman Jay Clayton started his remarks talking about the promise of distributed ledger technology (aka blockchain). He answered questions about recent SEC action against ICOs and delineated between decentralized tokens such as Bitcoin and Ether, and tokens which are controlled centrally and issued as an Continue reading “The Stage is Being Set”

SEC Enforcement

As we near the end of 2018, “the year of regulation”, it is fitting that the SEC has made moves in the past couple of weeks providing more action and clarity around its digital assets enforcement strategy. On November 8th, this came in the form of a settlement with EtherDelta (a decentralized exchange, or DEX, previously covered in this newsletter). The SEC charged the founder with operating an unregistered exchange, its first action against a DEX. Interestingly, in its statement, the SEC noted that “EtherDelta had both the user interface and underlying functionality of an online securities exchange and was required to register with the SEC or qualify for an exemption”. Despite some decentralized functionality, EtherDelta stores its order book on a centralized server (as the Ethereum blockchain does not yet have the functionality to support this), and the SEC seems to have picked up on this distinction, showing Continue reading “SEC Enforcement”

Into the Wild

A few weeks ago, I wrote about the proliferation of stablecoins, crytpocurrencies using different mechanisms to maintain a stable value versus a specific price (most often US$). The goal is to reduce volatility when utilizing decentralized applications. Many exchanges have rolled out their own stablecoins which are used in trading cryptocurrencies on their exchanges — instead of using BTC or ETH which are prone to volatility.

Tether (USDT), the first stablecoin to trade in 2015, has been in the middle of significant drama within the past few days along with Bitfinex, the exchange it is closely tied to. Questions have circulated for years on whether Tether has the US dollar reserves to back its coin, claims that have been exacerbated in recent days as Bitfinex halted fiat deposits and changed banking partners. USDT lost its peg, falling at one point to less than $0.90, before recovering as Bitfinex re-opened deposits. Meanwhile, Continue reading “Into the Wild”

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”