Category: regulations

The Fog of War: Three Themes Crypto Investors Should Pay Attention To Now


This post is by jlk from The Barefoot VC


“War is the realm of uncertainty; three quarters of the factors on which action in war is based are wrapped in a fog of greater or lesser uncertainty” —Clausewitz

The unspeakable violence and aggression that Russia has unleashed against Ukraine and its people is the first all out “hot war” invasion in Europe since WWII. Fallout is being felt across the global economy, roiling markets and causing many investors to seek relative shelter amidst the volatility. As with any global crisis, it is also a moment of uncertainty and unease for many market participants. There are three key themes crypto investors should be paying attention to over the coming weeks:

1: The power of decentralization of crypto comes into focus

Since its debut in 2009, Bitcoin has been heralded as a self-sovereign alternative to government controlled fiat. Citizens of countries with hyperinflationary environments, capital controls and monetary policy that negatively impacted the populace (ie, India’s demonetization in 2016 which deemed certain notes illegal practically overnight) have often turned to Bitcoin as a relatively safe haven for their assets. In the United States, the COVID crisis and ensuing monetary policy highlighted the benefit of holding Bitcoin as a self-sovereign store of value and hedge against inflation. The decentralization that is at the core of cryptocurrency has come into sharper focus over the past weeks. Yesterday, Infura, a cloud -based node network for Ethereum, cut off access for wallets in Venezuela and quickly reversed course blaming the outage in code that was (Read more...)

What’s Libra? China Takes the Stage


This post is by jlk from The Barefoot VC


While company after company pulled out of Facebook’s Libra project, the US Congress grilled Mark Zuckerberg, the SEC halted Telegram’s token offering, and several US legislators called for a digital dollar, China had a few words for the world…

In the first of a flurry of announcements over the past week, China’s President Xi Jinping made his first public statement on blockchain tech, calling for the country to “seize the opportunity”. A few days later, China’s National People’s Congress passed a cryptography law to regulate the sector. Bitcoin’s price shot up from $7K to nearly $10K, and China had to issue a statement warning against speculation when blockchain related stocks surged on local exchanges – not unlike what happened in 2017 in the US.

China publicly embracing blockchain tech is significant in that it will likely spur other countries to pay attention to the sector, so as to not be left behind. Once China puts its resources behind something, results follow quickly. This announcement reminds me of China’s focus on artificial intelligence – billions have flowed into the sector since China’s stated in 2017 that it wanted to be the world leader in AI by 2030.

None of this is a surprise to those of us following the sector for awhile…China banned crypto exchanges from operating on the mainland in 2017, but it has been widely believed that they would re-enter the space with regulations and a strategy in place. As if on cue, Binance, the largest crypto exchange by (Read more...)

SEC Fines and Libra Woes


This post is by jlk from The Barefoot VC


This past week, two companies within the token ecosystem announced settlements with the SEC. The SEC has been pursuing enforcement action for the past couple of years in wake of the ICO boom and bust of 2017. Neither of the companies who settled admitted fault, but both have paid fines. Block.one (EOS creator) paid $24M on its unregistered $4B offering while Nebulous (SIA creator) paid $225K on its unregistered $120K offering. Nebulous also has a utility token offering; interestingly, the SEC agreed not to take action on that token, which seems to allow for a dual token structure going forward. Block.one’s relatively small fine given its massive raise, in my view, is not too dissimilar from the small fines that tech giants Facebook, Google and others have paid due to privacy violations. While regulation is certainly here for crypto, the SEC appears to be making good on its claim that it wants to support innovation while holding companies to current laws.

Meanwhile, Libra, the cryptocurrency announced by Facebook back in June, is facing a tumultuous start. Regulators from France and Germany have vowed to block Libra’s use in Europe due to concerns relating to financial stability, money laundering and consumer risk. Both governments asserted that no private entity should claim monetary power.

In the face of this setback, the Libra Association contends that they will be “firmly maintaining (their) launch schedule” for the second half of 2020. They emphasized that the stablecoin will be backed by fiat reserves from a (Read more...)

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


This post is by jlk from The Barefoot VC


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 “welcomes responsible innovation…that expands access to financial services”. This is in contrast to President Trump’s tweetstorm a couple of days ago:

“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….”

 

“We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable,” Trump continued. “It is by far the most dominant currency anywhere in the World, and it will always stay that way. (Read more...)