Iterating the night away

The Update

A reminder: This week at TokenReporter we’ve instituted a few changes. First, the newsletter will cost $20 a month or $100 a year (it is $60 a year for a limited time if you’d like to invite friends.) If you’ve received this newsletter in your inbox then you’re golden - I’m grandfathering in the 5,000+ folks who have been reading this for a while. This small amount of cash allows me to add a new mid-week post as well as hire some new talent so be on the lookout for changes in the system. I encourage you to tell friends and neighbors about the site and the newsletter.

Second, we’re expanding the newsletter to twice weekly, with a bit more token discussion coming to you every Wednesday. Look for it in your inbox this week. While you’re looking forward to that, why not take a glance back at last Wednesday’s?

"Sierra Leone wishes to create an environment of trust with the voters in a contentious election, especially looking at how the election will be publicly viewed post-election. By using blockchain as a means to immutably record ballots and results, the country hopes to create legitimacy around the election and reduce fall-out from opposition parties," he said.

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A quick thought

PwC and Northern Trust (custody bank) just announced that they're launching an "instant audit" product via a private blockchain to increase transparency and decrease audit times. This seems like yet another place where traditional business mainstays can take advantage of blockchain tech to improve their regular course of business practices. If they don’t, someone else will.

Coca-Cola and the US State Dept. are working on a blockchain to record worker’s contracts as smart contracts, with the intention of preventing abuse of worker’s rights through a decentralized registry.

My thought is, the flexibility of a decentralized registry with transparency has applications all over. Not everywhere, but so many places can use it, that it makes sense for old stodgy finance as much as it does for the developing world. Look around and see if you can see applications around you that haven’t given it much thought yet. Every few years I meet people who think that everything that can be invented has already been invented. And yet, there’s still so much more to iterate on.

Two token sales to watch 👁️

Giftcoin is setting out to make a coin for charitable causes. There are a ton of difficulties around charitable giving, including the issue of trust. Are the funds being used for the purpose they were donated? Are charities transparent enough? By making it possible to show exactly where funds were spent, perhaps it can encourage greater transparency and efficacy, across a wide range of trusted charities. The whitepaper indicates they plan to make fees only apply for moving funds between fiat and crypto.

KYC Legal is attempting to solve the problems of identity for finance. Serving consumers and services to validate users while protecting their information so that services can comply with know your customer legislation. The whitepaper covers the use cases and how the business hopes to work.

The Good, the Bad, and the Ugly 😊😠👹

😊GOOD: For the first time in history US Congress included cryptocurrency in its Joint Economic Report for 2018. The report takes into consideration the sudden spurt of popularity of Bitcoin in 2017, and also recognizes the potential of the digital coin, stating:

If digital currencies become less volatile in the future, valuing items in those denominations could become easier and individuals might begin using them more frequently as a medium of exchange. (Report, p. 208)

At the same time the report warns against possible risks involved in trading in cryptocurrencies as well as the wide applicability and security that Blockchain technology could provide. It also calls for clarity in regulation. The report indicates US government’s approach of observing the sector and considering its next moves carefully.

 

The US House House of Representatives held a hearing in House Financial committee titled “Examining the Cryptocurrencies and ICO Markets” on March 14, 2018. A group of the sector’s experts gave testimonies in regards to ICO markets, governmental oversight, and regulation. The witnesses included Mike Lempres (Coinbase), Robert Rosenblum (Wilson Sonsini Goodrich & Rosati), Peter Van Valkenburgh (Coin Center), and Dr. Chris Brummer (Professor of Law at Georgetown University).

The hearing didn’t give any definite clarity, rather was a step toward bringing the debate to the front. The House was vastly opinionated with some committee members showing optimism and others outward hostility. According to the official memorandum, the hearing’s main agenda was “economic efficiencies and potential capital formation opportunities that cryptocurrencies and ICOs potentially offer to businesses and investors, and review the adherence to applicable laws,” as well as current regulatory approach.

Meanwhile, a voice has been raised to form a self-regulatory American body called “Virtual Commodity Association.”


😠BAD: Reports have appeared that the U.S. Securities and Exchange Commission (SEC) is targeting hedge funds that are set up to work for outside investors of cruptocurrencies and ICOs. The sector consists of about 220 businesses that manage at least $3.5 billions of dollars and has experienced a boost of 1,000% in 2017. Subpoenas have been sent out by SEC’s Enforcement Division to investigate the businesses for possible misconduct. Requests for information included questions about security measures, protocols, and pricing.

SEC aims to protect clients’ billion dollar investments, especially in cases of overpricing of services, and expand on the now-limited federal oversight. The crackdown may eliminate some risk for investors, but it’ll definitely to weave out the unregistered ICOs as well.

It’s SEC’s attempt to check if the hedge funds comply with regulation that requires them to prevent misappropriation of clients’ money by custodianship of the funds with third parties (banks, brokerages). This action, if indeed results in crackdown, may cause the crypto hedge funds a complete upheaval through another dose of regulation.


👹
UGLY: Three crypto exchanges have been raided by South Korean officials due to embezzlement accusations. Allegedly, the exchange’s staff and its higher-ups siphoned the customers’ money to buy crypto using other platforms.

South Korean cryptocurrency market has come under scrutiny for an increasing number of money laundering cases, but that is hardly surprising considering it’s one of the world’s largest market for crypto trading.

Back in January South Korean Financial Services Commission (FSC) banned anonymous virtual accounts, which forced crypto investors to use their real identities and digital bank accounts to trade. At the same time South Korean government officials are banned from holding and trading crypto.

FSC’s crackdown, or a move to protect consumer interests against unlawful market practices, reminds of SEC’s policy of bringing the volatile cryptocurrency sector under control.

News 🆕

Allegedly, Twitter is preparing to block cryptocurrency advertisements on its website. Twitter experienced an influx of fake accounts and imposters scamming people through fake giveaways posts or requesting donations.

Facebook already implemented a ban on crypto-related ad content due to its “deceptive promotional practices” and, similarly, Google’s update of the financial services policy bans crypto advertisers from using Google Adwords since June, 2018.

Disclosure

We will run advertising in the newsletter and if would like to appear at the beginning or end of this newsletter please email joanna@cabalpartners.com We do not expect that we will run a token sale to fund this newsletter but Victor or I may run our own token sales later in the year.

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