2018, Everything Bitcoin?

What if? As a lawyer who has advised on fiat payments for many years, I have a duty to encourage clients to ask themselves: what would you do if a lot of payments became cryptocurrency payments? I don't think this will happen in 2018, but it would be naive to avoid the elephant in the room of payments - cryptocurrencies.

Bitcoin. Whether as a store of value that rivals gold, or a somewhat expensive payment method, it looks like Bitcoin is here to stay. Even it its value drops like a lead balloon, the number of users alone gives Bitcoin a floor value that is something more than nil. On the world's most popular Bitcoin wallet alone, there are 21 million users. Even the most cynical tulip, ponzi, fraud and other derisive opinions are, at least partly, offset by people voting with their feet. Owning a little Bitcoin or one of the many other crypto currencies, purely for educational purposes is perhaps the best thing you can do as 2017 winds down.
ICOs. Initial Coin Offerings, of which there are hundreds have, de facto, transformed the time-comsuming and expensive IPO process into a lighting-fast way to raise capital. Most ICOs are either illegal securities or unlicensed money services businesses. But that is beside the point; ICOs are de facto, shifting capital from one generation of financial services providers (i.e. stock exchanges, banks, brokers, financial advisors, MSBs etc..) to another generation of people who, (legally or illegally), are unencumbered by the constraints of licensure and traditional compliance, and are building a new financial infrastructure for the new millennium. As the capital to build financial system changes hands, so will the systems. As ICO platforms seek to capture old markets with new technology (e.g. lending, insurance, health data, sharing, etc...), they could benefit from traditional payments professionals in subjects such as underwriting, risk assessment and AML.
Generational Blinder Check. Traditional payments providers are caught off-guard because they have banked (pun intended) on traditional fiat-based financial services for their whole careers. Hard as it may be to teach old dogs new tricks, it's time for the old-guard of payments to 'get with the program' and understand virtual currency and blockchain.
Speculation. In the long term, I don't think people will earn livings (as they are now) simply betting on the ups and downs of virtual currency on exchanges like CoinbaseKraken and Polinex. Nor do I see ICOs as a long-term source of revenue. I also expect the SEC to have a full docket of ISO take-downs in 2018, like those of DAO and PlexCorps.
Traditional Payment Value in Virtual Currency Markets. The long-term value in cryptocurrency is from the same services that have been provided with fiat currency for centuries: lending, storage, processing and exchange. Merchants that have to account to the IRS in USD, will find it cumbersome to account of the value received across a multitude of cryptocurrencies. This creates opportunities for crypto payment processing services, like Bitpay, Stripe and Shopify. Note that FinCEN views virtual currency payment processing as MSB activity, and some states, like NY, may as well. Bitcoin lenders, nebeus, bitbond and getline are all workin the ancient business of lending with the new medium of Bitcoin. There are also opportunities in bookkeeping for virtual currency, where Quickbooks and various accountants are already active.
Integration Middle Ground. Without launching your own ICO or virtual currency, its easy enough to integrate an existing payments platform with one of the existing third party crypto providers. In addition to traditional supplier underwriting criteria (i.e. security, financials, reputation, business logic), a crypto provider should be vetted for their legal compliance status. Getting compliance wrong in crypto (like other MSB activity) can have bad outcomes, such as that for BTC-e.
Traditional payment skills are more important than ever to help cryptocurrency businesses learn from the past despite creating a financial system that is altogether new.

Adam Atlas Attorney at Law is licensed in New York and Quebec. Nothing in this e-mail should be construed as a legal opinion or commentary on laws other than in the two jurisdictions where the author is admitted.