Plus, a lotta love for Crypto Mom
This week’s big news is that token sales might get a revival — and with the SEC’s blessing. SEC Commissioner Hester Peirce has proposed a three-year safe harbor period for such sales. It was pretty widely applauded by most of Crypto Twitter, which means of course there were also a few outraged takes. Meanwhile, Ethereum takes some steps forward, while ConsenSys takes a step back, and things get testy between Mike Novogratz and Ripple.
On this week’s Unchained, we have the first in a series of essays written by some of the best writers in crypto, which we’ll be running these next few months while I finish up my book. The first is by Linda Xie, in which she dives into the history of memes, analyzes what makes a good meme and why some crypto memes are effective, and when. And on Unconfirmed, Elizabeth Stark of Lightning Labs talks about the company’s big announcements this week: a $10 million Series A and the launch of its first paid product, Lightning Loop.
This Week’s Crypto News…
‘Crypto Mom’ Proposes 3-Year Safe Harbor Period for Token Sales
On Thursday, in a speech at the 4th International Blockchain Congress in Chicago, SEC Commissioner Hester Peirce proposed a safe harbor for token sales, in which projects would have a three-year grace period after the sale, during which they could work toward a certain level of decentralization, which she calls Network Maturity and defines thus: “Network Maturity is the status of a decentralized or functional network that is achieved when the network is either:
(i) Not controlled and is not reasonably likely to be controlled or unilaterally changed by any single person, entity, or group of persons or entities under common control; or
(ii) Functional, as demonstrated by the ability of holders to use tokens for the transmission and storage of value, to prove control over the tokens, to participate in an application running on the network, or in a manner consistent with the utility of the network.”
Judging from the reaction on Crypto Twitter, most people at least recognize this as a significant step. Blockchain President and chief legal office Marco Santori tweeted, “It is an elegant solution to the most complex legal challenge of this crypto era. … It’s a logical and sensible continuation of the SAFT Framework we proposed back in 2017. Follow the securities laws while investor risks predominate; follow consumer regs once consumer protection risks predominate. Give it some time to evolve from one to the other.”
ETH 2.0 to Launch in Late Q2
The Block reports that Ethereum 2.0’s beacon chain may be ready to launch by the middle of the year. Currently in a test net phase using just one software client, the team plans to try out a test net with at least two compatible software clients for increased resilience of the network before launching. ETH 2 now plans to roll out with 64 shards instead of the originally planned 1,024.
Aztec Brings Privacy to Ethereum
In other Ethereum news, Aztec launched its privacy network on Ethereum, including a software development kit in order for decentralized apps to incorporate zkDai, a private version of the stablecoin Dai, which hides the amount transacted.
ConsenSys Lays Off 14%, Restructures Into Software Development and Investment Units
Ethereum venture studio ConsenSys is splitting in two, partly due to the difficulty it had raising money with both investing and software development activities under one roof. Now the software development arm is targeting a raise of $200 million, and Ryan Selkis of Messari wrote in his newsletter that they are aiming for a valuation between $400 million to $600 million pre-money and that the company is currently doing revenue under $50 million a year.
A New Population Hit By the Coronavirus: Bitcoin Miners
Due to the “prolonged holiday” inspired by the Coronavirus, some of the largest bitcoin mining equipment manufacturers, including Bitmain, MicroBT and Canaan are suspending shipments of mining equipment, as well as their manufacturing and customer service operations. This comes at a time when demand for mining equipment is high, ahead of the Bitcoin halving expected in May, when the number of new coins being minted with every block is cut in half from 12.5 bitcoins to 6.25. One market observer believes that since the hashing rate on the network is likely to rise, the disruption could affect the miners’ profitability.
Mastercard Chief on Libra: From Financial Inclusion to Facebook’s Wallet
Mastercard chief executive Ajay Banga dished to the Financial Times about why the credit card network pulled out of Libra — and it’s mainly due to concerns over compliance and its business model.
He said, the Libra Association’s key members would not put in a writing a commitment to “not do anything that is not fully compliant with local law.” As examples, he mentioned know your client and anti-money laundering processes as well as data management.
He also was discomfited by how Libra was marketed as a financial inclusion tool but that Facebook wanted to link it to a proprietary digital wallet, Calibra. He says, “It went from this altruistic idea into their own wallet. I’m like: ‘this doesn’t sound right.’”
Caught on Tape: Novogratz Says XRP Will ‘Underperform Immensely’
CoinDesk obtained an illicit tape from a conference in which Galaxy Digital CEO Mike Novogratz said XRP would QUOTE, “underperform immensely again this year.” He said this was due to the fact that Ripple owns 60 billion of the 100 billion coins. He said, “When I’m buying a stock, if I know [someone’s] selling $10 billion-worth of it at some price, it makes me less excited to buy the stock.” Hilariously, Galaxy has invested $23.8 million into Ripple the company and values its stake at $27.6 million. After getting some pushback by Ripple, Novogratz further elaborated on his stance with a few tweets, saying XRP was still in the proving phase and that Bitcoin has taken the role of store of value. He added XRP has a fervent community mostly in Asia but a large supply of about 57% to absorb. He said, QUOTE: “The price of $XRP will be determined like all prices. If there are more buyers than sellers (and the company has a lot of control here) the price will rise. The company needs to distribute ina rational way at the same time building a real and scalable use case.”
Bakkt’s Consumer App to Debut by Mid-2020
In an earnings calls, ICE CEO Jeffrey Sprecher said Bakkt’s planned acquisition of Bridge2 Solutions will “accelerate the second phase of our digital asset strategy.” Bridge2 Solutions provides loyalty rewards programs. The Block reports that the application will be available in the first half of this year and that it will enable users to pay at any merchant and also convert between digital assets such as bitcoin, loyalty points and in-game rewards.
Multicoin Outperforms Bitcoin Over the Last 2 Years
There’s a nice profile in Forbes by my former colleague Jeff Kauflin of Multicoin Capital’s Kyle Samani and Tushar Jain, both of whom have been on my podcasts. Kyle kicks things off with this first quote: “Two years from now, zcash is worth zero.” And later Union Square Ventures’s Fred Wilson chimes in that Kyle “can be a little controversial and aggressive.” It talks about how they bet 15% of their portfolio on BNB token and saw an eightfold return but that one of their investments, EOS, was a bust. The only line I quibble with is where Jeff says, “Jain and Samani are also pound-the-table bitcoin bulls.” The last few times I talked to Kyle, he was not a bitcoin bull, but perhaps others on his team have pulled him to their side. Either way, great profile on two of the more unabashed and outspoken investors in the space. And last comment: you have to check out the article if only because Kyle and Tushar are wearing matching navy blazers with crisp white buttons downs. They definitely get a 10 on style for the photo shoot.
The Halving Is Priced In, Not Priced in, Priced In, Not Priced In
Today’s second Fun Bits is a hilarious meme I saw on Crypto Twitter about the upcoming Bitcoin halving. Or, “the halvening” as the meme calls it. Btw, people, is it that you don’t know “halvening” is not a word or is it that you’re trying to be funny like flippening?
