China drops hammer on ICOs. South Korea hints at future regulations. Hong Kong issues statement. Brazil’s central bank runs blockchain tests. Tether finally responds to critics: “trust us” (note: we don’t). Bitcoin Cash is going strong after one month. Ethereum’s Raiden scaling solution passes milestone. Monetha ICO raises $37 million in 18 minutes.
We’ve written out short overviews of the topics discussed on today’s show below! Be sure to listen in to the whole podcast to get more information, insights, and thoughts on each of them from Darren, Pedro and JJ!
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|Traditional Financial Markets||Cryptocurrency Markets|
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In a joint statement from seven government administrations the Chinese government has banned all organizations and individuals from raising funds through Initial Coin Offerings and presumably token sales. A list of 60 different ICO platforms was supplied as examples of what is no longer legally allowed.
The list included many companies that have the word ICO in their name. These companies would solicit contributions from individuals to then contribute as a buying collective to various token sales and ICOs. The tokens and coins would then be distributed to the individuals minus a fee.
The new regulation is aimed at protecting consumers from the token sale hype and risky nature of these gambles. Many in the greater crypto community see this as a good move and look forward to more clarity regarding digital crypto start-ups. Others see this as a chilling effect on future innovation in China.
One thing to note is that many savvy buyers have been enriched with the latest crypto price climb. Random individuals rising to power on the back of a crypto fortune could certainly upset the apple cart in China.
Almost in step with the news from China, South Korea’s digital currency task force held a joint meeting this past Sunday. The National Tax Service, Korea Fair Trade Commision, and the Financial Services Commision were in attendance and reports indicate that ICO fundraising is in the crosshairs.
Authorities may ‘punish’ ICO platforms and presumably token sales for violating the capital market act. This act makes it illegal to raise funds through a stock issuance using cryptocurrencies. There is also talk of punishing the Korean Exchanges that suffered hacks recently.
Yesterday, Hong Kong’s Securities and Futures Commission issued a statement indicating that it may consider certain tokens to be securities. The Commission says that defining tokens as securities would subject them to regulation:
“Where the digital tokens involved in an ICO fall under the definition of ‘securities,’ dealing in or advising on the digital tokens, or managing or marketing a fund investing in such digital tokens, may constitute a ‘regulated activity.’ Parties engaging in a ‘regulated activity’ are required to be licensed by or registered with the SFC irrespective of whether the parties involved are located in Hong Kong, so long as such business activities target the Hong Kong public.”
This statement appears similar to those recently issued by the Securities and Exchange Commission in the United States as well as by the Monetary Authority of Singapore. Most companies that are planning upcoming ICOs and token sales appear to have taken notice of this trend, and they are taking various steps to ensure that their tokens will not be classified as securities.
On August 31, the Central Bank of Brazil released a study of Real Time Gross Settlement System (RTGS) prototype platforms based on blockchain technology, including Ethereum.
Seeking to study distributed ledger technology (DLT), the Central Bank of Brazil tested prototypes for an Alternative System for Transactions Settlement (SALT) on Ethereum-based BlockApps and Quorum, as well as on HyperLedger Fabric and Corda.
With respect to HyperLedger Fabric, the team concluded that it was capable of creating a satisfactory result but suffered similar issues around privacy.
Corda was abandoned during development after the team found critical issues preventing the deployment of the technology to the ascribed use-case.
When testing the Quorum prototype, the team assessed it more favorably than the other platforms:
“The first advantage seen on Quorum is the Ethereum similarity. One of the objectives of the project is to reuse as much as Ethereum protocol as possible, making it simpler to maintain the platform aligned with innovations introduced to Ethereum.”
The researchers noted that Ethereum’s code was “tested in the wild” for two years, making it relatively secure and compliant when used to deploy permissioned blockchain environments. Researchers also expect future Ethereum developments will likely be compatible with Quorum.
If you have listened to Neocash Radio in the past few weeks you may have heard us issue a scam warning regarding Tether and Bitfinex. This past week Tether has published a blog post that both insults critics and does little to explain the recent explosion of new USD Tethers being brought into circulation. The post attempts to minimize the number of critics while sticking to the company line, ‘trust us’.
Wasn’t the point of cryptocurrency to avoid the whole ‘trust us’ bit?
The post links to some .pdf documents from earlier in the year when banking in Taiwan was still a thing. That’s where the data ends at 54 Million USDT. Since then the supply of Tethers has skyrocketed to 394 million, a 629% increase! In the world of crypto, Tether sticks out like a sore thumb. They have no immediate transparency, there is almost no communications from the company, they can create new tokens seemingly randomly, and there is no way to actually redeem Tethers for the common user.
Every other coin or token has a fixed, known emission rate. Tether’s emission seems to depend on when the tokens can be used to buoy the price of bitcoin on Bitfinex.
Darren’s Bitcoin Cash Update: Chris Pacia’s Article on Scaling
It has been exactly once month since Bitcoin Cash split away from Bitcoin Core and by any reasonable standard it should be considered a success. At the time there was a huge amount of uncertainty. Would anyone support the new fork? Would it trade on any exchanges? Would it survive the initial difficulty adjustment? Would anyone mine it? The answer to all these questions turns out to be yes. Remember, some of the loud voices in the Bitcoin community went on the record predicting that Bitcoin Cash would be worth “not even a dollar each.”
Ethereum’s Raiden Scaling Solution Just Passed Another Milestone
Revealed on the Raiden GitHub page yesterday, the testnet is a major milestone for the project, one that will lead to the next phase of development before the code is ready to launch on the live ethereum network.
Raiden – which has been in discussion since 2015 – is one part of ethereum’s solution to that problem. Inspired by Bitcoin’s Lightning Network, the technology would shift the majority of transactions off of the ethereum blockchain to create an alternate network of peer-to-peer payment channels.
As previously reported by CoinDesk, the network is intended to massively increase transaction speeds, potentially enabling over a million transactions per second.
Raiden also accommodates the exchange of tokens and features an API to facilitate interactions with decentralized applications.
The Monetha peer-to-peer, e-commerce platform raised $37 Million in their 18 minute token sale this past weekend. The ticker symbol is MTH and there are 214,079,315 in circulation out of a total 402 Million tokens. Monetha is looking to offer a complete solution with a smartphone app for the consumer, an e-commerce platform for online retailers and a Point-of-Sale retail solution. One feature that makes this project stand out is the Decentralized Trust and Reputation system. The system is powered by smart contracts and allows both the buyer and sell to rate the other. Seeing as it is built into the app this could cover the whole spectrum of purchases you would make with a wallet.
Since our last show I have published an interview with Gabriel Dusil from ADEL. Check it out here! Also stay tuned for an interview featuring Monaco coming out tomorrow!
An Important Disclaimer
We would like to remind you that any content on the Neocash Radio podcast and/or website should not be regarded as financial or legal advice. Please be mindful of any and all regulations regarding cryptocurrency in your particular jurisdiction. Never invest/gamble more than you are willing to lose and always safeguard any digital currencies you own by keeping them in a wallet whose private keys you control.
JJ – firstname.lastname@example.org
Co-Founder, Producer, Managing Director
Darren – Darren@neocashradio.com
Co-Founder, Technical Writer
Pedro – email@example.com
Ethereum and Crypto-mining Expert
Randy – firstname.lastname@example.org
Former Co-host and Cool Dude
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