Debates over Ether as a Security
. Gary Gensler, the former Chairman of the CFTC, has reignited the debate over whether Ether should be considered a security. In an interview with the New York Times
, Gensler says Ether and Ripple could be non-compliant securities, given the way they were created and sold. In response, Coin Center
argued that ethereum’s decentralized network and current utility ensured that it failed the Howey
Test today. While skeptics like Preston Bryne are cautioning that decentralization
may not actually be a defense for Ethereum's Howey
case. Given the manner of Ethereum’s ICO/pre-sale, its centralized data repository on Github, and the Ethereum Foundation as a common enterprise, Ethereum could be at risk, however unlikely.
The latest lawsuit against Coinbase is going to a jury trial.
Last July, a class action lawsuit was filed against Coinbase on behalf of customers of the now-defunct cryptocurrency exchange Cryptsy and its CEO Paul Vernon. The lawsuit alleged Cryptsy and Vernon used Coinbase to launder and steal millions of dollars worth of user funds over a several-year period and specifically points to Coinbase's alleged failings when it came to taking active steps to prevent money laundering through its services. Coinbase wanted to settle in arbitration, but two judges ruled against the request. This lawsuit will now move to a public jury trial and will proceed to discovery. Potential implication: even stricter AML laws for crypto exchanges ahead. (Coindesk
Fedcoins: The Federal Reserve Considers its own Digital Money
. In its latest study, the Federal Reserve Bank of St Louis considers the use of central bank digital currencies called “Fed Coins”. The gist: a central bank could easily introduce a cryptocurrency, given existing standards, such as Ethereum's ERC20 or ERC223. Alternatively, the central bank could attach value components to fractions of existing cryptoassets, such as Bitcoin. To use fedcoins, people would need to show proof of identity and set up a wallet with the Federal Reserve or an affiliate bank, at which point they could buy the new currency with US dollars at a one-to-one ratio. This would ultimately result in the slow disappearance of physical cash. The study argues that the creation of a “central bank electronic money” would increase the stability of the financial system, simplify and clarify monetary policy, and require little administrative effort. (The Federal Reserve Bank of St. Louis
Quick Bits (Don’t read that, I read it for you)
Did I miss something big?
+ In a move to preempt a u-turn in crypto trading markets, Circle moved up its minimum ticket size to $500,000, with an average of $1 million, offering an option that traditional exchanges with less liquidity cannot match.
+ After a week-long vote, 55% of voters in the ethereum community said no to restoring the 500,000 ETH that was frozen due to the Parity multi-sig bug from last year.
+ Andreessen Horowitz is reportedly preparing to launch a separate fund to buy and sell crypto assets.
+ Following a $4 million fundraise from last fall, Orchid Labs is planning to raise an additional $125 million in funding through a private sale.
+ Reuters surveyed 400 of its financial services clients and found that 20% of those institutions are considering trading cryptocurrencies within the next 12 months, with 70 percent of those saying they are planning to start trading cryptocurrencies in the next three to six months.
+ SK Telecom, South Korea’s telecom giant, is reportedly launching a blockchain-based platform for authenticating customers' identities.
The Powers That Be
+ The 16 cryptocurrency exchanges that are currently registered with Japan's Financial Services Agency (FSA) have formally launched a new self-regulatory organization called the Japanese Cryptocurrency Exchange Association. The group will comprehensive rules regarding customer protection and internal controls, seek compliance from member companies, and impose penalties on bad actors.
+ Goldman Sachs hires Justin Schmidt, formerly of quantitative trading firms Seven Eight Capital LLC and WorldQuant LLC, as head of their digital asset markets to help clients gain exposure to cryptocurrencies.
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