[header date=”14 December 2018″]Facebook expands its blockchain team, Coinbase explores new token listings, and Bitmain shrinks its operations.[/header]
What you need to know—and why
Facebook builds a blockchain team. Despite Facebook’s relative silence about the goals of its blockchain initiative, headed by former Messenger lead David Marcus, the tech giant is hiring for the unit. Five new blockchain-related jobs, including engineers and a product marketing lead, have been posted on the company’s careers page.
[takeaway]Facebook’s blockchain job descriptions are rife with boilerplate grandiosity and reveal little in the way of substantive plans, suggesting uses as varied as “equitable financial services, new ways to save, or new ways to share information.” ➡️[/takeaway]
ConsenSys employees are not happy. According to internet chat logs from a virtual Town Hall, employees are confused and disappointed after ConsenSys founder Joseph Lubin announced his blockchain company would lay off 13% of its staff. “Who is going to be held accountable for the decisions that got us into this situation?” asked one participant.
[takeaway]ConsenSys’s financial position is uncertain in the wake of the ether price collapse. Employees don’t know whether the ethereum-focused company, which Lubin funds, has years or merely months of solvency left. ↘️[/takeaway]
Bitmain is shutting down its Israeli development center. Bitmain’s R&D location in Ra’anana is closing because of the crypto downturn, Israeli business site Globes reported. The center’s 23 employees will be laid off, including branch manager Gadi Glikberg, who has been with the company since January 2016.
[takeaway]Bitmain wanted to expand its Israeli center as recently as July. The company manufactures mining equipment and operates mining pools, so given its exposure to bitcoin prices, it’s surprising the company wasn’t better prepared for a downturn. ↘️[/takeaway]
Coinbase explores support for 30 new digital assets. The exchange—one of the largest and most popular in the US—announced it will evaluate a plethora of digital tokens for potential listings. Some of the most recognizable names on the shortlist include Cardano (ADA), EOS, Golem (GNT), Decentraland (MANA), NEO, Augur (REP), Status (SNT), Storj, Stellar (XLM), XRP, and Tezos (XTZ).
[takeaway]Up to now, Coinbase has been extremely cautious—perhaps even deferential—to regulators, including the US SEC and CFTC. Whether the new strategy is motivated by declining revenues or concern about aggressive competitors, Coinbase has ramped up its growth strategy (and taken on more risk in the process). For traders, that could be a cause for celebration, but for investors looking for substance it might be a cause for concern, as less legitimate coins stoke speculative appetites once more. ➡️[/takeaway]
Blockchains LLC can break ground. The Public Utilities Commission of Nevada signed off on plans for a 102-mile fiber optic ring to provide high-speed internet access to Storey County, the eventual location of Blockchains’ planned smart city.
[takeaway]Guaranteeing internet access is a first step toward development of the city. To date, however, there has been little demonstrated use for blockchain technology aside from cryptocurrencies, so the company’s broader vision remains mysterious. ➡️[/takeaway]
Disclosure: Private Key writer Matthew De Silva is a former reporter at ETHNews, a Blockchains LLC company.
[supplemental headline=”Chart interlude”]
In 2018, bitcoin has reasserted its dominance.
[img src=”https://cms.qz.com/wp-content/uploads/2018/12/atlas_SJXZ8WWx4@2x.png”]
[mailto filter=”Chart” subject=”Here’s a chart idea…”]Got a killer chart idea? Let us know[/mailto]
[/supplemental]
Crypto-meets-finance
The Commodity Futures Trading Commission published a request for public input about ether and the ethereum network. The US derivatives regulator said it wants to better understand the similarities and differences between digital assets (bitcoin and ether in particular). You can send in your own response here, which will eventually be posted on the commission’s website. (These comments are worth keeping an eye on. Some responses can be hilarious diversions, but others are more thoughtful or reveal the thinking of industry bigwigs.)
The request noted a speech earlier this year by Securities and Exchange Commission director Bill Hinman that seemed to absolve ether (and those involved in buying and selling ETH) of the regulatory burdens associated with securities, namely enhanced requirements on registration, disclosure, and accreditation of investors. This week, the CFTC seemed relatively cool on the speech, regarding it as Hinman’s “personal views.”
[takeaway]Bitcoin derivatives were a test case that helped regulators learn about digital assets, and it’s not clear that bitcoin futures substantially improved transparency or brought order to that market. There’s little reason to think watchdogs will be in a hurry to approve ether futures, but the process will provide insight into the thinking of a key Washington regulator. ↗️[/takeaway]
[supplemental headline=”Reasonable doubt”]
A call to outlaw crypto. Andreas Utermann, CEO of Allianz Global Investors, implored regulators to “outlaw” cryptoassets while taking part in a panel discussion in London on the next financial crisis. Cryptocurrency fraud in particular has burned investors, Utermann said while speaking alongside Andrew Bailey, head of Britain’s Financial Conduct Authority, according to Law 360 (paywall).
“You should outlaw it. It’s fraud,” said Utermann, who runs one of Europe’s largest asset managers. “I am personally surprised that regulators haven’t stepped in harder.”
Bailey called Utermann’s declaration “quite a strong reaction,” but acknowledged that cryptoassets broadly lack “intrinsic value.” The FCA’s chief executive further expressed concern regarding the initial coin offering market, and said he admired the US SEC’s enforcement approach.
“Europe could learn a lot from that,” Bailey said. “The SEC has taken a very sensible approach based on case law and made some very strong interventions.”
[/supplemental]
Regulatory watch
Basis stablecoin project shuts down. Basis CEO Nader Al-Naji announced Thursday his company—which sought to develop a cryptocurrency with a stable monetary system—would end operations and pay back its investors, citing the burden of SEC regulations. Basis raised $133 million just eight months ago from marquee investors such as Bain Capital Ventures, Andreessen Horowitz, and GV (formerly Google Ventures), who shrewdly included a “return of capital” clause in case Basis failed to launch.
[takeaway]The startup, which has been called an “economic dumpster fire,” seems to have raised funds before performing all of its due diligence, becoming yet another spectacular crypto flameout. ↘️[/takeaway]
Tax reform in Japan. Banker-turned-politician Takeshi Fujimaki is calling for revisions to the cryptocurrency taxation system to reduce the maximum tax rate on profits from the sale of cryptos from 55% to 20%, allow investors to carry forward losses, and make trades between cryptocurrencies tax exempt. Fujimaki, the leader of Nippon Ishin, a right-wing opposition party, also advocates a de minimis exemption for the usage of cryptocurrency, so small transactions—like buying a coffee—don’t require users to pay taxes on gains.
[takeaway]If adopted, Fujimaki’s proposals could clear obstacles for wider cryptocurrency usage, though it will be difficult to decide which assets should qualify. While bitcoin seems like a obvious candidate, it might not be suitable for more centrally managed cryptos like ether and XRP, which fall into a regulatory grey area. ↗️[/takeaway]
UK floats bitcoin tax payments. Eddie Hughes, MP for Walsall North, has suggested local authorities and utility providers should consider accepting cryptocurrencies, after the state of Ohio in the US said it would—indirectly—accept tax payments in bitcoin.
[takeaway]Politicians in search of headlines apparently aren’t bothering to investigate the practicality of accepting cryptocurrency for taxes or public charges. Any implementation is likely to mirror Ohio’s quasi-crypto-for-taxes strategy, which appears to be waste of government resources that confers little benefit to taxpayers. ↘️[/takeaway]
[supplemental headline=”Hacks, scams, and capers”]
Bomb threats for bitcoin. Law enforcement in the US, Canada, and New Zealand are posting online warnings about anonymous bomb threats sent via email, which demand $20,000 in bitcoin as ransom for not detonating explosives. Schools, hospitals, a game development studio, and a newspaper were evacuated or put on lockdown because of the threats, which for now don’t appear credible.
An alias for a blockchain entrepreneur. Shaun MacDonald, a developer who helped create Blockchain Terminal, is actually Boaz Manor, a former hedge fund manager, The Block reported this week. Manor, a convicted criminal barred from the Canadian securities industry, allegedly changed his name and appearance before joining Blockchain Terminal, which raised $31 million through an initial coin offering. Blockchain Terminal is attempting to create a Bloomberg terminal equivalent for cryptocurrency trading, although by most accounts the devices aren’t anywhere near the real thing. In an online video interview, Manor admitted to using the “Shaun MacDonald” alias while working with Blockchain Terminal but denies any wrongdoing.
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Crypto calendar
🗣 January 8 Israel Bitcoin Summit. The Tel Aviv gathering features Nick Szabo (creator of the term “smart contract”), Meni Rosenfeld (chairman of the Israeli Bitcoin Association), and Ittay Eyal (assistant professor at Technion), among others.
🗣 January 31 Wall Street Blockchain Summit. The one-day event in New York will include discussion of market infrastructure, legal and regulatory considerations for blockchain and digital assets, and accounting matters related to crypto.
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