Costa Rican Workers Can Be Legally Paid in Cryptocurrency
Cryptos in Costa Rica Can Be Goods, Assets, Quasi-Money
Workers in Costa Rica may soon start receiving a portion of their salary in cryptocurrency, local media reported. As far as Costa Rican law is concerned, there is no reason this cannot happen. The country’s legislation allows employers to partly remunerate their staff with goods that are not currency, as long as the legal minimum wage is paid in money. It also develops the concept of “quasi-money”, or any asset that can be used as a means of payment and has been widely accepted as such in the society.
“This is a trend that could take hold in the country,” said Rolando Perlaza who is working at Nassar Abogados, a prominent law firm in Central America. “This type of payment would in no way replace traditional or liquid cash. It would rather become an incentive for the workers, who could decide if they accept these currencies as payment for their services,” the expert elaborated, quoted by the Costa Rican News. He also emphasized that in any case employees are protected by article 166 of the country’s Labor Code.
The publication notes that in October last year, the Central Bank of Costa Rica (CBCR) issued a directive which established that cryptocurrencies are outside the national banking system. The document also indicated that carrying out any type of commercial transactions with digital coins is a “limited option” in the country. Along with that, the central bank warned that those who use cryptocurrencies assume the associated financial risks.
Costa Rica’s Growing Crypto Sector
Despite CBCR’s assessment, the local crypto sector has been developing steadily in recent years with a growing number of merchants and other businesses, including many hotels and companies from the tourism industry, accepting cryptocurrencies as a legitimate payment method. Costa Rica, which has remained relatively open towards business ventures in the crypto space, has also seen a number of bitcoin ATMs popping up in the capital San Jose and elsewhere.
According to the report, the Latin American country also offers favorable conditions for crypto mining thanks to its renewable sources. “Our Costa Rica-based crypto mining facility utilizes renewable energy options such as solar and wind. We think renewable energy has to be an essential part of any crypto related project. This green approach is good both for us and for the planet and makes the new business opportunities even better,” said Daniel Yépez, a local crypto entrepreneur. “Cryptocurrencies are here to stay and we are embracing the changes,” added Yépez whose company, SH Mining Technologies, specializes in providing cloud mining services.
Written by Bitcoin.com
Coinbase Gets $20 Billion Prime Client, Ads Back on Facebook
$20 Billion Hedge Fund
Coinbase has been focusing on big institutional money recently, launching a custodial service this month and, earlier this year, establishing Coinbase Prime, a suite of tools specifically designed for institutions, along with an institutional coverage group headquartered in New York City to provide a higher level of service to these type of clients. And the strategy has apparently now started to bear fruit.
A $20 billion hedge fund has already signed up for the prime business according to “people familiar with the matter” cited by Business Insider. And additional massive hedge funds are being worked on by the Coinbase Prime team to possibly join the trading venue too. The lack of a prime brokerage to use is seen as the main hurdle for getting big money trading crypto as institutional players don’t like to risk it with a direct exposure to an exchange. Coinbase may have solved the issue by launching its own prime service, something that on Wall Street is usually reserved for mega-banks. The company is also reportedly planning to offer margin finance as early as the end of the year, allowing institutional investors to trade on borrowed capital for increased leverage.
Coinbase Ads Back on Facebook
The company also got good news on its retail side of the business, with its promotional posts allowed back on Facebook. CEO Brian Armstrong announced on social media that: “Facebook banned ads for crypto earlier this year. Proud to say we’ve now been whitelisted and are back introducing more people to an open financial system.”
After banning all crypto ads in January, Facebook has updated its policy in June to allow promotional content from “pre-approved advertisers.” With its position in the US market, and the money it can afford to spend on lawyers, it’s little surprise that Coinbase made it on the list.
Images courtesy of Shutterstock.
An $8 Million ICO Ran Out of Tokens. What’s Next Is Anyone’s Guess
“Scarcity” may be a crypto buzzword, but “shortage” has hardly made the footnotes – until now.
In early July, the developers behind U Network, a blockchain publishing protocol valued at around $8 million, abruptly announced that it had run out of its reserve of UUU crypto tokens, and that it planned to buy back some of the supply it distributed to early investors through its airdrop in February.
At the start of the project, U Network established a 10 billion UUU cap on its token supply (worth approximately $15.6 million), setting aside 40 percent of its total tokens (about $6.2 million) for the founding team and future development.
Yet, due to a rising number of strategic partners and interest in its token, the project announced on Medium, “The demand for UUU tokens has exceeded our current designated holdings.”
The post continued:
“The team now faces a problem: leaving our ecosystem tokens intact, how do we pursue these new opportunities to grow the U Network ecosystem?”
The result is a problem that seems to have little precedent.
The structure of ICOs and airdrops varies widely across projects, particularly with regard to the number of tokens minted, distributed and maintained by a given company or non-profit. While some projects do not limit the number of tokens that can be created within their blockchain ecosystem, others, like U Network, choose to implement a cap on the total supply.
For U Network, the 10 billion limit was implemented because the content-centered project, which aims to “help online content platforms better align with the interests of their users,” wanted to “provide sufficient incentives to community members.”
While U Network’s dilemma is currently an outlier in the industry, other blockchains that have implemented hard caps on their ICOs and airdrops may soon find themselves in a similar quandary as they begin building their ecosystems.
Likewise, U Network’s situation may force similar projects to confront an even more difficult question: what happens when your startup runs out of its own tokens?
Method to the madness
Incentives are especially important in blockchain systems, and so far, there is no established methodology by which projects can determine how many tokens to issue and keep.
That’s according to Joshua Gans, a professor of strategic management at the University of Toronto, who told CoinDesk: “There is no metric.”
“If you want to use tokens for incentives, the amount of the incentive is dependent on the price of the token,” he explained. “At the start, it is hard to predict that.”
Gans added that establishing the amount of tokens projects should keep is equally as unsystematic.
According to Catherine Tucker, a professor of management and marketing at MIT, projects face a doubly difficult situation in the highly scrutinized industry. Not only do they lack methodologies for determining token supplies and holdings, they must also consider the perception of their actions.
“I think this case illustrates the huge trade-offs founders face,” she told CoinDesk. “If they keep too many tokens in reserve, they are often accused of being greedy. But if they give away too many tokens then they lose a crucial lever they need to incentivize people to use their platform or service in the future.”
As such, remedying a shortage of tokens looks to be a precarious task. Solutions such as increasing the token supply of the network could influence the token’s price, angering investors and jeopardizing their trust in the project.
So instead, U Network plans to refurbish its holdings by conducting a token “buy-back.” In practice, this means it will re-purchase 1,000 ETH worth of UUU (about $284 million worth) from current token holders over the course of several stages.
“For the first stage we would be buying back 200 ETH worth of UUU between the price range of 0.004 and 0.005 USD,” U Network told CoinDesk. At press time, one UUU token was valued at $0.001569.
As for how the project determined the number of tokens to re-purchase, it explained, “We believe it’s a reasonable amount. Not too high to affect market price, not too low to affect the expansion needs.”
From Gans’ perspective, the buy-back is “a good way to go.” He went on, “You issue the tokens and retain some other currency to use for buy-backs if you make an error. The other option is to give yourself the ability to issue more tokens for incentive purposes but that is ultimately the same as retaining some tokens at the outset.”
And as for what the rest of the industry could do to avoid U Network’s dilemma, MIT’s Tucker suggested:
“If I had to give advice to founders, it would be to think about the uncertainty involved with the project. In those cases of heightened uncertainty, it might be best to limit the initial distribution of tokens until the business plan has evolved and been tested.”
Empty gas image via Shutterstock
Written by CoinDesk.com