SEC Says ICOs Can Be Effective, Novogratz Is Bullish & SWIFT Feels The Blockchain Heat
Off the Blocks, Vol 45
|Dec 14, 2018|| 1|
This newsletter is our weekly roundup of some of the significant blockchain news this week. Join thousands of subscribers to get your weekly news to map your blockchain strategies, be aware of regulatory announcements and get an overview of the rapidly changing blockchain landscape.
Number of the Week
Yeoman Growth Capital seeking to raise a blockchain fund to encourage real world adoption
No one on Wall Street embraced cryptocurrencies with as much gusto as legendary trader Mike Novogratz. After Jamie Dimon called Bitcoin a “fraud”in September 2017, Novo, as he’s known, predicted, correctly, it would hit $10,000 and keep climbing. The former hedge fund manager and Goldman Sachs Group Inc. partner became an unlikely hero of the crypto movement and a billionaire on paper. Emboldened, Novogratz announced he was starting a cryptocurrency merchant bank, Galaxy Digital Holdings Ltd. But as he was raising money for the firm in January, Bitcoin began its historic plunge. Galaxy has since reported $136 million in trading losses. Novogratz is undeterred.
"For me, crypto was interesting because what macro guys do is try to make complicated things simple. It was macro markets on steroids. I’d never seen something go parabolic on a log chart before. I thought, my God, this is the single craziest chart ever. The SEC was behind the curve, so they slammed on the brakes. But the SEC doesn’t want to kill this innovation; we’ve spoken to them at length. I think you’ll see a market for security tokens—a real estate portfolio that gets tokenized, for example. These aren’t things that go from $1 to $1,000. They’re things that yield 14 percent, and they’ll be sold to qualified buyers. That sounds a heck of a lot less sexy, but you’re going to see that business grow."
PayPal is giving its employees a crash course in crypto token economics. The company has launched an internal blockchain-based incentive platform for employees, Cheddar has learned. The initiative was built over a period of six months by about 25 people in PayPal's San Jose-based innovation lab and launched in mid-November, according to Michael Todasco, the director of innovation. Employees can access their tokens through the company's internal website and continue earning more by participating in innovation-related programs and contributing ideas. The tokens, which hold no value outside of PayPal's walls, are also tradable among employees with each transaction being posted to effectively a "public ledger."
Seven southern European Union member states have released a declaration calling for help in the promotion of Distributed Ledger Technology’s (DLT) use in the region. The declaration was initiated by Malta and signed by six other member states, France, Italy, Cyprus, Portugal, Spain and Greece. the document cites “education, transport, mobility, shipping, Land Registry, customs, company registry, and healthcare” as services which can be “transformed” by this technology. The group also cites blockchain tech’s use for protecting citizens’ privacy and making bureaucratic procedures more efficient.
A big knock on Bitcoin is that its underlying technology is too slow to be a useful real world ledger.That’s why an ambitious new protocol called Conflux is intriguing. The project, which has raised $35 million from Sequoia China and Chinese Internet companies, claims to overcome a key limitation of existing blockchain technology.The proclaimed breakthrough is being led by some notable names, including Andrew Yao, a Turing Award recipient who is known as China’s “godfather of computer science.” Other investors include Huobi, Baidu ventures, F2Pool.
Smart contracts provide an essential function that makes blockchain such a useful platform for building solutions. But it’s not enough. Enter Ricardian Contracts. Information from legal documents can be placed in a Ricardian contract and then automatically and securely executed once certain conditions are met. One important benefit to a building on top of a Ricardian contract is that it is readable by machines and humans alike, which makes it both technically binding (as a machine executable form) and legally binding (as a legally executable form).
Swiss Post and Swisscom will take advantage of their trusted reputation in Switzerland to create a blockchain platform for use by themselves and others that will be based on Hyperledger Fabric2. Swiss Post is publicly owned and the country’s second largest employer. It already uses blockchain technology to record temperature data while transporting pharmaceuticals in the national postal network. Considering the public ownership of both companies, the development could almost be termed a national blockchain platform provision, and thus potentially a first for blockchain.
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has announced its decision to launch a pilot Global Payment Initiative (GPI) service which aims to compete with the growing threat of competing blockchain and fintech solutions provided by institutions like Ripple, JP Morgan and Transferwise. With the move, SWIFT has turned its attention to containing the threat of blockchain-based fintech startups offering the same services at a cheaper price. One such blockchain project is J.P.Morgan’s Interbank Information Network (IIN). Launched in September, it now boasts a membership count of more than 130 banks, including Satander and Societe Generale.
United States Securities and Exchange Commission (SEC) Chairman Jay Clayton has said that Initial Coin Offerings (ICOs) “can be effective” but that “securities law must be followed.” Clayton underlined that there are “a number of concerns” relative to ICOs. More precisely, he pointed out the fact that, according to him, ICOs are currently operating in a way that grants substantially less investor protection than that of traditional equities and fixed income markets. the creation of the FinHub and other SEC activities demonstrate that their “door remains open to those who seek to innovate and raise capital in accordance with the law.”
The United Nations’ charity arm for children, UNICEF, is funding research into blockchain tech. UNICEF is investing $100,000 in six blockchain startups to “solve global challenges using blockchain technology,” ranging from healthcare delivery transparency to managing finances and resources. The investments are part of a broader program which already funds 20 technology startups. Each of these startups is based in a developing economy, with firms based out of Argentina, Mexico, India, Tunisia and Bangladesh.
The six recipients are Atix Labs and Onesmart, which are developing platforms for tracking finances; Prescrypto, which is building a platform to track patient histories; Statwig, which is working to ensure vaccine delivery with a supply chain platform; Utopixar, which is working on a social collaboration tool; and W3 Engineers, which is looking to develop an offline networking system that does not require internet access. UNICEF has been looking into blockchain for years, investing in an identity-focused startup two years ago and trialing smart contracts for transactions.
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