Blockchain/Crypto Paradoxes

Source: BankUnderground, Nov 2018
<read source for details>

Existing private cryptocurrencies do not seriously threaten traditional monies because they are afflicted by multiple internal contradictions. They are hard to scale, are expensive to store, cumbersome to maintain, tricky for holders to liquidate, almost worthless in theory, and boxed in by their anonymity. And if newer cryptocurrencies ever emerge to solve these problems, that’s additional downside news for the value of existing ones.

  1. The congestion paradox
  2. The storage paradox
  3. The mining paradox
  4. The concentration paradox
  5. The valuation paradox
  6. The anonymity paradox
  7. The innovation paradox
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SEC (US) Enforces Against 2 ICOs

Source: TheBlockCrypto.com, Nov 2018

<official SEC announcement: LINK>

  • Cease-and-desist orders were entered under the Securities Act of 1933 against Paragon and CarrierEQ Inc. (Airfox)
  • The SEC has developed or appears to be developing a template for ICO enforcement
  • The SEC made it clear that tokens that fit within the Howey Test rubric are actually securities
  • It appears that the volume of enforcement actions by the SEC is set to increase

Source: “https://twitter.com/stephendpalley/status/1063457944757592064&#8221;

“Pay for Play” Journalism

Source: The BreakerMag, Oct 2018

where companies offer money for promotional coverage that’s disguised as objective reporting.

Cointelegraph recently overtook veteran industry publication Coindesk in Alexa traffic rankings, making it the highest ranked crypto-focused news site globally. In researching this story, a source suggested that Cointelegraph would accept payment to place articles that weren’t marked as sponsored, but in my correspondence with a representative of the site this didn’t seem to be the case.

But, instead of discouraging ‘Nikolay’ from seeking to pay for coverage, a member of the business team was happy to point us towards some sites in the Cointelegraph Media Group that did. (The Group is an advertising partnership, allowing marketers to coordinate ads or sponsored posts across member sites, although in other respects the sites are editorially independent.)

US SEC targets hundreds of ICOs

Source: DeCrypt, Oct 2018

During the past few months, the Securities and Exchange Commission has significantly widened its crackdown on certain initial coin offerings, putting hundreds of cryptocurrency startups at risk.

The SEC sent out a slew of initial information-seeking subpoenas at the start of 2018. Now the agency has returned to many of those companies, and subpoenaed many more—focusing on those that failed to properly ensure they sold their token exclusively to accredited investors.

The agency is exerting pressure on many of those companies to settle their cases. In response, dozens of companies have quietly agreed to refund investor money and pay a fine. But many startups that have been subpoenaed say they are left in the dark struggling to satisfy the SEC’s demands, and are uncertain of how others are handling it, according to conversations with more than 15 industry sources as part of a joint investigation by Yahoo Finance and Decrypt.

William Hinman, the SEC’s director of corporation finance, provided further clarity in June at Yahoo Finance’s All Markets Summit when he said ether does not appear to be a security, but suggested that most ICOs are securities offerings, and that, “calling the transaction an initial coin offering, or ‘ICO,’ or a sale of a ‘token,’ will not take it out of the purview of the U.S. securities laws.”

Any U.S. company offering a security must register its offering with the SEC, or qualify for an exemption. Amid the ICO boom, virtually none have registered a security offering. Thus, they must meet an exemption. The SEC exemptions include selling only to investors outside the U.S., or selling only to accredited investors, which are individuals with income higher than $200,000 in each of the past two years or a minimum net worth of $1 million.

ehind closed doors, many more negotiations are underway. The SEC has gotten dozens of ICOs to refund buyers and pay a fine, simply by reaching out and asking questions.

SG Eases Banking for Crypto-Firms

Source: Bloomberg, Oct 2018

Singapore’s financial regulator is willing to lend a hand to cryptocurrency firms having problems setting up local bank accounts, but doesn’t plan to loosen its rules to lure more crypto startups to the country.

“We should not be trying to create an extremely lax regulatory environment in order to attract that kind of business,” Monetary Authority of Singapore Managing Director Ravi Menon said Tuesday when discussing the crypto industry in an interview with Bloomberg News. “What we are trying to do is to bring the banks and cryptocurrency fintech startups together to see if there is some understanding they can reach.”

China Considers Yuan-Backed Stablecoins

Source: Block-Chain.com, Oct 2018

he op-ed piece is titled “A Brief Analysis of Stablecoins” and gives information on the recent spread of stablecoins around the world and states that so far most of them have been pegged to the US dollar.

The authors insist that this kind of development of the cryptos anchored to the USD gives the American national currency an opportunity to dominate in the global monetary system. Moreover, it has a negative overwhelming effect on other fiats. They say:

“If the U.S. dollar-pegged stablecoins can eventually be widely recognized by the market and can prove their use in the real economy, we should double down on our research efforts [on the issue] and learn from relevant experience to support domestic institutions to issue yuan-pegged crypto stablecoins.”

“The evolution of this monetary system will likely be eventually achieved by a central bank-issued fiat digital currency.”