- Swiss (Neutral) ICO Guidelines (payment, utility, and asset tokens)
- Ethereum Invests In Itself (ecosystem is important!)
- Tezos Is Back (locked funds and lawsuits, no problem)
- Good Reads (decentralization, token-curated registries, onboarding)
Swiss ICO Guidelines
The Swiss canton of Zug is known as “Crypto Valley”, having one of the most crypto-friendly business environments and regulations in the world. Blockchain heavy-hitters like Ethereum, ShapeShift, and Tezos all have headquarters in the area. On Friday, FINMA (the Swiss version of FINRA) published ICO guidelines that clarifies how it views blockchain-based tokens: Payment, Utility, and Asset; while also leaving room for hybrid classifications. If an ICO's underlying token falls into any of the classes, then it must comply with regulations required for each class:
- Payment tokens — AML (anti-money laundering) regulations
- Utility tokens — None
- Asset tokens — Securities law and civil law requirements
Many ICOs have taken to calling their tokens “pure utility” tokens, but the reality is that most of them function practicality for payments (eg. trading on an exchange), as well as assets (eg. staking in “proof of stake” consensus protocols to receive an earnings stream). The progress in regulatory guidance is good, but unless we see detailed interpretation and enforcement of projects, the overall effect is not likely to change the status quo.
Ethereum Community Fund
The Ethereum ecosystem is the biggest in crypto, and it’s about to get even bigger. Six ERC-20 (Ethereum-based) projects have pooled together $100+ million USD in value to create the Ethereum Community Fund (ECF), with an initial “Infrastructure Grant” that endows funds to projects that build “crucial open-sources infrastructure, tooling, and applications”.
The forefront challenge for Ethereum currently is scaling, as 10-15 tps won’t support the next wave of Cryptokitties. For a good overview of the possible solutions, check out Josh Stark’s article on Ethereum’s Layer 2 scaling solutions. He gives a high-level overview of state channels (off-chain p2p transactions), Plasma (hierarchy of chains), and Truebit (off-chain computation).
Tezos Is Back
In July 2017, Tezos ($XTZ) raised $232 million USD (almost $900 million now) in what was the largest ever ICO at the time. Tezos promised formal code verification and, most importantly, on-chain governance in its new blockchain platform, a departure from the way Bitcoin or Ethereum handled protocol changes (“off-chain informal governance” aka human discussion; Vitalik comments on the pros and cons). The raised funds were legally managed by the Swiss Tezos Foundation headed by Johann Gevers (who has just stepped down!). An internal struggle soon developed between the Tezos husband-wife founders the Breitmans, and Gevers, locking up the funds and consequently slowing development. Lawsuits from irate “investors” soon followed.
Future XTZ holders had all but given up, but this week Kathleen Breitman announced that the team would “go rogue” and launch the official platform despite the fund issues and lawsuits. Following this and the news that Gevers is stepping down, XTZ (pre-launch) has rallied almost 40% to $4 in the past week amidst an overall market downturn.
Why Decentralization Matters – Chris Dixon – Medium — Chris Dixon describes the main benefits of decentralized networks (over their centralized counterparts): aligned economic incentives, open governance, and ultimately attraction of developer and entrepreneur talent.
A token to self-regulate tokens. But really. – TwoBitIdiot – Medium — Ryan Selkis sets forth an idea to advance “self-governing” of the crypto space (a Self-Regulatory Organization (SRO) eg. FINRA) using a blockchain structure called Token-Curated Registries (TCR). Token holders in a TCR would help curate a registry of projects that fulfill a set of criteria (eg. adheres to securities laws), and be a potentially valuable signal for investors and regulators alike.
How Bitcoin Onboards New Users | User Onboarding — One of my favorite UX sites. Sam walks through a purported “normie” (not my term) onboarding experience into buying Bitcoin. A couple of dead-ends leads to Coinbase which turns out has a pretty good onboarding experience.
See you guys next week —
Crypto Weekly Roundup is for informational purposes only and does not constitute any investment recommendations.