NYDFS Chief Defends State Regulator’s Crypto Approach
New York Department of Financial Services superintendent Maria Vullo defended her office’s approach to regulating cryptocurrencies on Thursday.
Speaking at the Council on Foreign Relation’s “Legal Tender? The Regulation of Cryptocurrencies” panel in New York on Wednesday, Vullo said that her view is “regulation in this space, just like any space where you have money transmission, [is necessary],” making a point she often revisited during the discussion.
While some state and federal regulars are taking time to create rules for the industry, “it certainly hasn’t taken New York long to establish a framework” for regulating cryptocurrencies, Vullo said in her opening statement, referring to the state’s controversial BitLicense.
The role of regulation in the cryptocurrency space was a contentious topic, with Blockchain president and chief legal officer Marco Santori claiming regulators should ease up on the over-regulation.
That said, he did acknowledge that “a lot of token sales run afoul of the spirit of the law, if not the letter of the law. But we have to be careful not to lump them all together.”
In particular, he argued that New York’s laws “have been an abject failure.”
However, Vullo derided developers who claim that their work should allow them to launch token sales free of disclosure or other requirements, saying:
“I think regulators absolutely need to be in the space, I know they’re saying ‘we’re innovative, we’re startups, we need to be left alone and put in a sandbox.’ Toddlers play in the sandbox. Adults play by the rules.”
In another rapid exchange, CNN investigative journalist and panelist Jose Pagliery expressed concern about the idea that “code is law,” saying that while this may be true, coders can modify certain protocols:
“If you’re the executive at a bank, you have people to answer to … if you’re one of a dozen coders around the world whose name no one knows and you’re the one at the controls changing how this cryptocurrency works … we have to figure out how these people are held accountable.”
Santori disagreed with this premise, saying “that is not only a bad question, you should feel bad for asking it.”
In turn, Vullo said: “I didn’t know this was about feelings.”
Seema Mody, Jose Pagliery, Marco Santori and Maria Vullo image by Nikhilesh De for CoinDesk
Written by CoinDesk.com
Regulations Round-Up: CFTC Rejects FOIA Request, SEC Not Modifying Securities Laws
In recent regulatory news, the United States Commodity Futures Trading Commission (CFTC) has rejected a Freedom of Information Act (FOIA) request regarding the subpoenas recently received by Bitfinex and Tether; the United States Securities and Exchanges (SEC) Chairman, Jay Clayton, has indicated that the regulator will not alter existing securities legislation to cater to cryptocurrencies. Maria Vullo, the Superintendent of Financial Services for the State of New York, has praised the regulatory efforts made by the CFTC and SEC in the arena of initial coin offerings, and the SEC has announced Valerie Szczepanik as the commission’s new Senior Advisor for Digital Assets and Innovation.
CFTC Rejects Freedom of Information Request
It has been reported by media that the U.S Commodity Futures Trading Commission has rejected a request under the Freedom of Information Act for access to the subpoenas delivered to Bitfinex and Tether on the 6th of December.
The FOIA request, dated June 5th, requested “subpoenas issued to Ifinex inc. also known as Bitfinex and its subsidiary companies, as well as subpoenas issued Tether Limited and its subsidiary companies.”
The anonymous individual who submitted the request claims that the CFTC responded stating that it had discovered “thousands of responsive records, all of which are exempt from the FOIA’s disclosure requirement,” adding that “Some records are exempt from disclosure under FOIA Exemption 7(A), 5 U.S.C. § 552(b)(7)(A), because disclosure of that material could reasonably be expected to interfere with the conduct of the Commission’s law enforcement activities.”
The CFTC also reportely stated that “Some records were obtained on the condition that the agency keep the source of the information confidential. Those records are exempt from disclosure under FOIA Exemption 7(0), 5 U.S.C. § 552(b)(7)(D). That exemption is intended to ensure that “confidential sources are not lost because of retaliation against the sources for past disclosures or because of the sources’ fear of future disclosures.”
SEC Will Not Modify Securities Regulations to Cater to Cryptocurrencies
In a recent interview with CNBC, the chairman of the U.S Securities and Exchange Commission, Jay Clayton, firmly rejected the suggestion of modifying existing securities legislation in order to adapt regulations to cryptocurrencies. Mr. Clayton stated “We are not going to do any violence to the traditional definition of a security that has worked for a long time. We’ve been doing this a long time, there’s no need to change the definition.”
The SEC chairman also sought to clarify the regulator’s jurisdiction regarding virtual currencies. “Crypto-currencies: These are replacements for sovereign currencies, replace the dollar, the euro, the yen with bitcoin. That type of currency is not a security. A token, a digital asset, where I give you my money and you go off and make a venture, and in return for giving you my money I say ‘you can get a return’ that is a security and we regulate that. We regulate the offering of that security and regulate the trading of that security.”
New York Officials Praise U.S. Authorities for ICO Regulations
At a recent event organized by the Council on Foreign Relations titled “Legal Tender? The Regulation of Cryptocurrencies,” Maria Vullo, the Superintendent of Financial Services for the State of New York, praised the efforts of U.S authorities to regulate initial coin offerings (ICOs).
Mrs. Vullo stated “I think the SEC has done the best job possible in its efforts to regulate token sales,” adding, “in many ways, this is no different than other types of banking-related services where you have the state regulators, you have the public companies that are also regulated by the SEC and the CFTC.”
Mrs. Vullo added “I think a lot of these token sales run afoul of the spirit of the law, if not the letter of the law. But we have to be careful not to lump them all together.”
Valerie Szczepanik Named SEC’s Senior Advisor for Digital Assets
The SEC has announced Valerie Szczepanik as the regulator’s new Senior Advisor for Digital Assets, and Associate Director of the Division of Corporation Finance. Mrs. Szczepanik has worked with the SEC since 1997, most recently serving as an Assistant Director in the Division of Enforcement’s Cyber Unit.
Chairman Jay Clayton stated “Valerie’s thought leadership in this area is recognized both within the Commission and across financial regulators in the United States and abroad. With her demonstrated skill, experience, and keen awareness of the importance of fostering innovation while ensuring investor protection, Val is the right person to coordinate our efforts in this dynamic area that has both promise and risk.”
Ms. Szczepanik stated “I am excited to take on this new role in support of the SEC’s efforts to address digital assets and innovation as it carries out its mission to facilitate capital formation, promote fair, orderly, and efficient markets, and protect investors, particularly Main Street investors. I look forward to working closely with staff across the agency, our regulatory partners, and the public as we provide a coordinated and strategic response to developments.”
Written by Bitcoin.com
Crypto Auction: $5.6 Million Andy Warhol Art to be Sold via Ethereum Blockchain
From bond issuances to educational certificates, blockchain technology is increasingly finding new use-cases every day. Stepping aside from its use in financial and industrial sectors, the ethereum blockchain will be utilized in June 2018 to facilitate the auction of Andy Warhol’s 1980 work 14 Small Electric Chairs for cryptocurrencies.
The auction will be carried out by Dadiani Fine Art in London’s Mayfair district, in partnership with blockchain platform Maecenas Fine Art. Overall, 49 percent of Warhol’s works will be up available for sale on June 20, and the auction house will accept bitcoin and ethereum as payment.
Regarding price, the piece is valued at 732 BTC or $5.6 million at the time of writing, and would undoubtedly change as per market conditions on the day of the auction. Reportedly, the reserve price is 25 BTC or $4 million. The auction house strictly requires potential buyers to comply with local regulations.
While will not be the first time an art piece is bought using cryptocurrency, it is thought to be the most expensive and high most high profile. In January 2018, the Art Stage Singapore witnessed the sale of four paintings in exchange of cryptocurrencies.
The founder of Dadiani Syndicate, Eleesa Dadiani, explained the development:
“We aim to render the future of fine art investments to global reach. The cryptocurrency will broaden the market, bringing a new type of buyer to art and luxury.”
Dadiani fancies herself as the “Queen of Crypto,” and earlier told The Times that the “world’s wealthy are looking for new ways to invest and the millionaire is changing.” Echoing her thoughts is Maecenas Chief Executive, Marcelo García Casil, who believes the sale “would help transform the art market.”
“We’re making history. This Warhol is the first artwork of many more to come,” Casil added.
The auction will be conducted on the Ethereum blockchain, and a smart contract will determine the final price for Warhol’s painting.
While whispers have previously been heard in the art world about blockchain making an impact in their sector, not much of a fruition has been witnessed yet. Undoubtedly, blockchain’s immutable properties can be of great help in the art domain – an industry mired with fakes and unregulated pricing.
At a recent convention in London, the co-founder of blockchain identify company Codex Protocol, Jess Houlgrave, stated that over 40 percent of all art pieces on the market are fraudulent. In this regard, blockchain’s benefits immediately come to mind – specifically the maintenance of traceable records on a public database that art collectors can view to verify their pieces.
Andy Warhol art image from Shutterstock.
Written by CCN.com
FOAM and the Dream to Map the World on Ethereum
Even Pokemon Go might need a blockchain.
While an augmented reality mobile app used to collect funny-looking, digital critters might sound like a silly (or useless) service to re-architect with blockchain, the developers at ethereum startup FOAM make a compelling case.
“The problem is that people lie about their location,” said Ryan John King, the co-founder and CEO of FOAM. Using a range of tutorials across the web, a tech-savvy Pokemon Go player could easily trick the game into thinking they’re in Hong Kong, catching all the unique Pokemon there when really they’re sitting in their apartment in Brooklyn, New York, he said.
That’ll be news to many since most people use GPS (the Global Positioning System) flawlessly on a daily basis.
King told CoinDesk:
“People think location is a solved problem.”
But it goes beyond the fact that shrewd Pokemon Go users could manipulate the system; King believes today’s GPS system, in its centralized form provided by the U.S. government, is insecure and prone to failure.
As such, FOAM developers want to build a technology that mirrors GPS but is instead an open technology that anyone can contribute to. And to do this, the team needs a particularly resilient map of the entire world, which they plan to devise with the help of ethereum smart contracts.
During Ethereal, an artsy ethereum conference in New York City in May, the FOAM team demoed their beta product, Spatial Index, which the website calls “a cross between a Bloomberg trading terminal and Google Maps.” The map shows all the locations of radio beacons deployed by users, which are represented as smart contracts on the Rinkeby testnet, a copy of the ethereum blockchain used for testing purposes.
And with that, FOAM then has joined the likes of Golem and Augur as a project arousing excitement in the community for its unique use of the ethereum blockchain.
Coinbase engineer Jacob Horne is so enthusiastic he called the FOAM product “the base layer for entire new economies.” And ConsenSys developer Simon de la Rouviere said that re-reading the whitepaper “just blows my mind again.”
Games and beyond
The secret behind FOAM’s work is the company’s “proof of location,” a cryptographic method for proving that a user has actually been at a certain location.
This technique will be used to build a secure location-based collection game, something that mixes the gameplay of Pokemon Go with that of CryptoKitties, the popular ethereum-based application for buying, trading and breeding digital cats – and where no one can cheat.
Speaking to this, King said, “We need something open source and horizontal and for anyone to plug into. With FOAM, you can build an app where you unlock a CryptoKitty only when you visit a particular location.”
And this idea is tantalizing to many, including Matt Condon, lead maintainer of ethereum library OpenZeppelin, who tweeted:
“I’m so, so excited for tokenized assets plus a proof-of-location protocol like FOAM. The real Pokemon Go will be possible.”
And while FOAM is starting with games, the team thinks the technology has potential far beyond this use case.
For instance, King believes the technology could be beneficial for supply chain management as well. Whether for food or jewelry, developers and entrepreneurs are looking to disrupt the global system of tracking consumer goods throughout its life cycle with blockchains.
As such, FOAM has begun working with ethereum-based supply chain startup, Viant, which recently demoed its product in tracking tuna from the waters of Fiji to the plates of Ethereal conference goers.
Technology and tokens
So how will all this work in practice? With low power wide area networks (LPWAN), a new type of emerging network used in many internet-of-things devices.
LPWAN technology, which costs between $10 and $30, allows anyone to contribute to FOAM’s map, beaming location information to the ethereum blockchain. And a significant number of people have already begun participating, although it’s far from covering the whole world just yet. But the Spatial Index beta does show that the idea works in practice.
“Deploying a LPWAN, just like a blockchain, is permissionless,” the FOAM blog post explaining the Spatial Index says.
Still, decentralizing location data has been on the minds of many for some time.
As such, FOAM believes its key differentiator will be its crypto token – to be released through a token sale later this summer. To King, the token will incentivize people to deploy LPWAN and contribute location data to its service, moving existing location protocols, which have not succeeded in attracting many users, forward.
According to FOAM co-founder and CTO Kristoffer Josefsson, though, the product is still quite far from the team’s grand vision. So far, the platform is up and running on the ethereum testnet, and the team is stress-testing the radio technology in an effort to come up with the final specification.
Once that’s done, they’ll run the token sale, and then push FOAM to the ethereum mainnet.
King told CoinDesk:
“Then, anyone can be a cartographer and help come up with a consensus-driven map of the world.”
Featured image via CoinDesk
Written by CoinDesk.com