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Abacus Weekly Crypto Recap #2 | Compliant​ ​ICOs,​ ​Faster​ ​Protocols​, ​And​ ​A​ ​Bright​ ​Crypto​ ​Future

CryptoAnalyst is happy to welcome the team at The Abacus for their second weekly crypto recap with us. They’ve got everything you need to know about this past week’s major happenings for crypto and ICOs. 

The Abacus Crypto Recap is a weekly update focused on two polar yet symbiotic elements of cryptocurrency markets—adoption and regulation. Let’s bring you up to speed.

Adoption

Bitcoin reached record heights thanks to CME Group’s announcement of a Bitcoin futures market
and blockchain projects from Norway to Japan continuing to propagate across the globe. For
now, excitement around tokenization, blockchains, and cryptocurrency shows no signs of slowing
down, especially with Templum’s bold announcement of an SEC-compliant ICO exchange.

ICO​ ​Exchanges​ ​Coming​ ​To​ ​A​ ​City​ ​Near​ ​You:​ ​Blockchain startup Templum has raised
$2.7M in a bid to build a fully compliant cryptocurrency trading platform, which will
consider tokens as securities. Similar to the recent announcement from Overstock,
Templum plans to create an alternative trading system compliant with the SEC and FINRA.
As regulated ICO exchanges enter the market, the likelihood that ICOs can become a
mainstream fundraising vehicle continues to increase.
Bitcoin​ ​Jumps​ ​Towards​ ​The​ ​Future:​ ​The CME Group, which runs a derivatives
marketplace, has announced that regulated Bitcoin futures trading will be made available
within the next two months. This offer affords institutions the ability to trade Bitcoin
futures as a hedge against other investments. CME is the world’s largest options and
futures exchange with over $3B in yearly revenue. CME’s desire to offer Bitcoin futures
demonstrates an increasing mainstream interest in cryptocurrency. It remains to be seen
whether or not American regulators will give BTC futures the green light.
Russia​ ​Works​ ​With​ ​Megafon​ ​To​ ​Issue​ ​Blockchain​ ​Bonds:​ ​Russia’s National Securities
Depository has issued a $10M bond for Telecom company Megafon using the
Hyperledger Fabric Implementation. Acting as a simple smart contract, buildings bonds on
a blockchain allows for streamlined issuance as it relates to compliance and regulations.
The bond itself was developed by California-based Altoros. Their head of blockchain
practice Oleg Abdrashitov remarked, “…What [banks are] asking now…is not only to
participate in the same commercial paper issue … but they’re asking whether they can
reuse the same nodes and the same network.”
Japanese​ ​Firm​ ​Goes​ ​All​ ​In​ ​On​ ​Crypto:​ ​Japanese financial conglomerate SBI group is
going on a blockchain tear, announcing eight new cryptocurrency based businesses ranging from
hedge fund management to mining. The group also plans on creating a dominant
cryptocurrency exchange platform. As far as their plans for mining, they claim they wish to
acquire market share via mining in order to “stabilize the market.” Their announcement
follows the explosion of businesses all over the world creating new blockchain-based
products, taking advantage of both the technology and the headline inducing fervor that
comes with it.
The​ ​“Other​ ​Bitcoin”​ ​Gets​ ​a​ ​Fork:​ ​Bitcoin Cash is already gearing up for its first hard fork,
scheduled for November 13th. The update will address issues with the currency’s difficulty-adjustment algorithm. The fork focuses on key specific areas including adjusting the
difficulty hash rate, targeting a mean block interval of 600 seconds, maintaining stability
for difficulty during periods when hash rates are stable, being able to scale hash rates
appropriately, avoiding oscillations in the feedback relationship between hash rates and
difficulty, and resilience to attacks including timestamp manipulations. Some Bitcoin Cash
nodes and wallets will have to upgrade their software by November 13th in order to
interact with the updated protocol.
DAG​ ​Protocol​ ​Provides​ ​Blockchain​ ​Evolution:​ ​Influential blockchain researchers Yonatan
Sompolinsky and Dr. Aviv Zohar, authors of the GHOST and SPECTRE protocols, have
announced a new project coming in 2018 that they describe as the next evolution of
blockchain technology. Designed to drastically speed up transactions, the system utilizes
a direct acyclic graph (DAG), described as a method of creating viable and scalable
payment rails utilizing the core concepts of distributed ledgers. According to
Sompolinsky, the structure is “releasing the blockchain from the naivety of the chain
structure.” This new system creates a new block every 10 seconds. These blocks are
then compared via DAG technology, and the most efficient and secure amalgamation of
blocks are interwoven into a thread of new blocks. Miners then analyze these blocks and
vote on which one shows the most valid transaction history. These are not entirely
different from the concept behind Ethereum’s “Uncle Blocks.” Once it is determined that
the most valid transactions have been selected, a record of them only exist for a limited
time before being removed from any means of storage or record. While much remains to
be ironed out, on the issue of funding Sompolinsky somewhat impishly remarked, “The
easy path for us was to do an ICO … We’re going for the more respectable path of an
equity.”
Utility​ ​Companies​ ​Go​ ​Blockchain:​ ​Italian and German energy companies Enel and E.on
have conducted a trial of a blockchain based energy trading marketplace as part of a
broader “enerchain” initiative supported by 30 European utility companies. E.on’s chief
digital officer stated, “We all believe in the enormous potential that blockchain
technology has for the new energy world.”
Hashgraph​ ​Giving​ ​Blockchain​ ​Some​ ​Competition:​ ​A team behind a new blockchain
consensus method dubbed Hashgraph claims to be the “future of the internet and
decentralized technology.” They boast that the technology doesn’t require Proof-of-Work
and can handle a transaction throughput 50,000 times that of most blockchains.
European​ ​Commission​ ​Gives​ ​Blockchain​ ​A​ ​Boost:​ ​The European Commission has
announced that it’s investing €30 billion on new technology initiatives that include
blockchain technology. The program aims to fund investments in the areas of migration,
security, climate, clean energy, and the digital economy, as well as “market creating
breakthroughs.”
Norwegian​ ​Miners​ ​Launch​ ​Asset​ ​Backed​ ​Token:​ ​Norwegian company Intex Resources
ASA plans to launch an asset-backed ICO that will back the value of the tokens with
physical mineral reserves of iron ore and nickel from the company’s partnership with
Amershaw Metallics Inc. While it remains unclear if this will be of interest to investors, as
the market matures, ICOs are looking for new ways to ensure the viability and utility of
their tokens to assuage concerns over future viability.

Regulation

Vietnam swiftly moved to ban the use of cryptocurrency, Singapore has kept its doors open for
now, and France’s new UNICORN project aims to pave the way for compliant ICOs. It seems that
governments all over the world have recognized the need to address the exponential growth of
cryptocurrency markets but are taking markedly different approaches to regulation.

Putin​ ​Launches​ ​Russia’s​ ​First​ ​Cryptocurrency​ ​Agencies:​ ​After Putin’s July directive, the
Russian government has chosen Vladivostok to become the country’s inaugural
cryptocurrency hub and the home of Russia’s first cryptocurrency agencies. The first such
agency, currently described as a crypto-advisory entity, will be a type of education center
offering seminars and discussions for those interested in working in the burgeoning
industry. Upon completion of specific seminars, attendees will be awarded cryptocurrency
certificates supposedly “allowing” them to do work in the field. The other agency seems
connected to Interpol and describes itself as a crypto-detective group. Citizens will “learn
to protect themselves from fake cyber-wallets, phishing sites, and hacker attacks.”
France​ ​Launches​ ​ICO​ ​Initiative:​ ​France’s Autorite des marches financiers (AMF), the
country’s financial regulator, has launched a new ICO initiative with the goal of creating a
regulatory framework for ICOs. The agency is currently debating between updating
existing rules to include ICOs or creating a new structure entirely. They have also created
a new program called “UNICORN,” which acts as a method for ICO organizers in France to
carry out fully compliant fundraising under the purview of the agency.
Vietnam​ ​Bans​ ​Cryptocurrency:​ ​The State Bank of Vietnam has issued an official ban on
the issuance, supply, and use of all cryptocurrencies set to take effect at the start of 2018.
Those found using cryptocurrencies will be fined anywhere from from 150 to 200 million
đong, approximately $6,600 to $8,800 at the time of writing. While summer rumors indicated
the possible legalization of Bitcoin in Vietnam, it appears attitudes have moved in the
opposite direction.
Kansas​ ​Puts​ ​The​ ​Kabosh​ ​On​ ​Political​ ​Bitcoin​ ​Donations:​ ​A local politician in the state of
Kansas requested guidance regarding U.S. politicians ability to raise funds via Bitcoin. The
answer from the Kansas GEC’s (Governmental Ethics Commission) was a resounding NO!
Bitcoin was officially deemed “too secretive and untraceable” by the Executive Director of
the GEC. With the current flurry of news tied to Russian election meddling in the United
States election, The GEC’s rational that Bitcoin donations could open the door for
“unidentified” lobbyists certainly resonated with the current political climate.
South​ ​Korea​ ​Decrees​ ​BTC​ ​A​ ​Commodity:​ ​Governor of the Bank of Korea, Lee Ju-yeol,
has declared that Bitcoin is a commodity rather than a currency in response to a series of
questions regarding Bitcoin’s potential status as a legal currency. He remarked,
“Regulation (for virtual currencies) is appropriate because it is regarded as a commodity,
not at the level of a legal currency.” Adding, “It is not a situation for the Bank of Korea to
take such an action at the present.”
Michigan​ ​Man​ ​Arrested​ ​For​ ​Illegal​ ​Bitcoin​ ​Sales:​ ​A Michigan man has been charged with
operating an unlicensed money transmitting operation. The man in question was
brokering BTC transactions worth hundreds of thousands of dollars without any proper
licensing. He used the website LocalBitcoins and met would-be clients at a nearby Tim
Horton’s under the alias “salt and pepper.” He was caught after federal agents purchased
$55,000 worth of BTC from him during a sting operation.
Singapore​ ​Keeps​ ​Its​ ​Cryptocurrency​ ​Doors​ ​Open​ ​(For​ ​Now):​ ​Singapore’s central bank
has stated it will not regulate cryptocurrencies but will continue to watch for risks. Ravi
Menon, managing director of the Monetary Authority of Singapore (MAS) said there is “no
basis for wanting to regulate cryptocurrency,” remarking, “we do want to have anti-money
laundering controls, countering the financing of terrorism controls in place. So
those requirements apply to activity around cryptocurrency.” In the past Singapore has
indicated that it plans to introduce regulations for ICOs.
U.K.​ ​Claims​ ​Crypto’s​ ​Terror​ ​Link​ ​Is​ ​Low:​ ​The U.K.’s economic and finance ministry has
released a document stating that cryptocurrencies pose a low risk for the funding of
terrorism, with the country’s National Crime Agency adding that digital currency’s use in
money laundering is also relatively low, clarifying that cryptocurrency does seems to be
used for laundering small amounts of money at high volume.
Lebanon​ ​Slams​ ​Crypto​ ​But​ ​Considers​ ​A​ ​Proprietary​ ​Digital​ ​Currency:​ ​Lebanon’s central
bank is planning on launching it’s own digital currency, which may or may not utilize a
blockchain architecture. Riad Salameh, governor of Lebanon’s central bank “Banque du
Liban,” shared his view that cryptocurrency was ineffective at serving as a national
currency, claiming, “These are not currencies but rather a commodity whose prices rise
and fall without any justification. For this reason, BDL has banned the use of this currency
in the Lebanese market.” He went on to say the country’s digital currency will be available
within the next few years.
Japan​ ​Issues​ ​ICO​ ​Warning:​ ​Japan has officially issued an ICO warning to investors, with
the country’s Financial Services Agency warning investors to understand the risks and the
content of an ICO project before investing, cautioning investors that, “The price of a token
may decline or become worthless suddenly.” The statement also warned that ICOs may
fall under the existing Payment Services Act and/or the Financial Instruments and
Exchange Act depending on the nature of the token. Japan has long been one of the
most ardent embracers of cryptocurrency and blockchain technology. This news serves
as an indication that ICOs are likely to become regulated in even the most lax countries.

Summary: The​ ​ICO​ ​Party​ ​Still​ ​Has​ ​Room​ ​To​ ​Grow

An increasing amount of countries are directly asserting greater control over the cryptocurrency
and ICO landscape.

Some nations are working to embrace the inevitable proliferation of the
technology, with France’s announcement of their UNICORN protocol aligning with recent news
from countries like Canada that are working to provide frameworks to legally facilitate ICOs.

Other nations have come out with outright bans, but this may be a precautionary measure
preceding the introduction of new regulations, or perhaps acting as a precursor to a government
created digital currency altogether, as we saw with the actions leading up to Russia’s
announcement of the CryptoRuble.

Interestingly, the U.S.’s SEC continues to cautiously address the topic, reinforcing the increasingly
established precedent that ICOs should be treated like securities while working actively on going
after the most malicious of players in the space.

The SEC’s work with platforms like Overstock and Templum suggests a future of formal regulation for ICOs in the largest economy on earth.

While cryptocurrency might inherently circumvent authority, the reality is one in which individual
countries will adopt regulations that best foster and protect their economies and interests.

This will likely result in a future landscape of varying degrees of regulation and international interoperability, much in the way the traditional securities market operates today.


Abacus is a cryptocurrency advisory and independent product development firm specializing in ICO strategy and cryptocurrency investment products. Through our content we aim to provide a voice of reason in the often overzealous world of crypto-markets.

Email hello@theabacus.io to discuss your ICO, chat cryptomarkets or just say hi!

William M. Peaster is a cryptocurrency journalist and copy-editor based out of El Paso, Texas. He's an avid fan of Ethereum, ERC-20 tokens, and smart contracts in general.

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