May 16, 2018

Weekly Brief

NYC Blockchain Week: Securities laws, sanctions violations, and Lamborghinis...

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Summary

Technology leaders from across the globe have centralized at "Blockchain Week NYC" in a myriad of events including including Coindesk's annual Consensus conference, which sold more than 8,500 tickets at an average price of $2,000 this year. So far, the week has hosted several major announcements from top crypto-companies, notable comments by regulatory officials, and a lot of Lamborghinis. 

In the regulatory sphere, CFTC Commissioner Brian Quintinez gave an introductory speech at Consensus in which he addressed the ongoing effort between the SEC and CFTC to clarify Ether's legal classification and eligibility for derivative products. Meanwhile, new connections have surfaced linking Russia to Venezuela's Petro dealings, and fears of sanction-induced economic crisis in Iran have opened a new test case for governments and citizens attempting to circumvent trade restrictions through the use of cryptoassets. 

In the exchange world, Coinbase's U.S. dominance sees an increasing threat from new foreign and domestic players, as Robinhood closed a $363MM fundraise shortly after launching the beta version of its crypto platform and European exchange-giant eToro announced plans to support 10-new cryptocurrencies in its approach on the US market.

Articles From the week

U.S. Must Move Quickly on Ether Status, CFTC's Quintenz Says

CFTC Commissioner Brian Quintenz opened regulatory dialogue in his Consensus briefing on Monday. Quintenz spoke about ongoing meetings between the CFTC and SEC regarding the decision on Ether's classification under current securities laws - a decision that will likely foster the formation of derivative products for the popular cryptoasset. When commenting on the timeline of the decision, Quintenz noted that he "wouldn't say days, but [he] wouldn't say months" either.

Iran Sanctions: People Are Turning To Bitcoin To Get Money Out

Following in the footsteps of Venezuela's "Petro" token, Iran may be the next host of a state-backed cryptoasset purposed to evade U.S. sanctions. In an order by President Donald Trump last week, the U.S. pulled out of the 2015 Iran nuclear deal, reinstating an array of sanctions originally lifted by the agreement and propagating likely economic turmoil. As the export-reliant nation seeks ways to free capital flows with sanctions in place, several Iranian government officials have touted cryptoassets as a possible solution.

Russia Bank Helps Venezuela Defy US Cryptocurrency Sanctions

Recent investigations into the dealings behind Venezuela's state-launched "Petro" token show trails alluding to Russian involvement. An article published by The Washington Post this week shines light on Evrofinance Mosnarbank, a Russian bank which brokers Venezuelan Petro to customers via wire transfer. Clay Porter, former head of the U.S. Justice Department's Bank Integrity Unit, commented on the connection, noting "Like kids on the playground, Venezuela and Russia think they are fighting a common bully in U.S. sanctions, so they’re going to try and form a united front". It remains uncertain how Evrofinance will be regarded in light of recent movements by the USTD to block US participation in the Petro token sale.

Robinhood, With No-Fee Trading App, Sees Valuation Soar To $5.6 Billion

San Francisco-based Robinhood recently closed a $363MM Series-D in a move which may threaten the dominance of Coinbase, the neighboring exchange giant. At a $5.6bn valuation, Robinhood's recent raise quadruples its worth and makes it one of the highest-capitalized West Coast fintech startups. Reports say the capital inflow will, in part, go towards advancing the company's cryptocurrency exchange platform, which many believe has the potential to challenge industry incumbents including Coinbase and its Asian rivals.

Investment Giant eToro Plans to Launch in U.S. With 10 Cryptocurrencies

Also joining in on the fight is Europe's eToro, which announced a pending foray into the American market at Consensus on Tuesday. Originally launched in Israel in 2007, eToro predates many of the industry's current front runners. Using existing trading tech, CEO Yoni Assia claims the company will attack the heavily saturated U.S. market by launching support for 10 cryptocurrencies and a "social" interface which allows users to publicly share their trading portfolios.

Winklevoss Crypto Exchange Wins Approval to Trade Zcash

Gemini became the first NY exchange to receive a license which allows it to offer trading for the privacy-centric cryptocurrency "Zcash" this week. Zcash is a popular privacy coin which aims to obfuscate identifying information from transactions, and as a result, has had limited exposure on US exchanges. Gemini announced that users will be able to begin depositing Zcash in their accounts on Friday (May 19th), and will be able to trade as soon as Monday (May 22). The trading pairs initially offered will be: ZEC/USD, ZEC/BTC,  and ZEC/ETH. 

What we've been listening to

Consensus Live Stream

Not interested in ponying up $2,000 to visit Consensus in person? Watch the live stream online today for free. Recordings from speeches throughout the event will be posted later this week.

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