Chain Letter: Square, Bitlicense, & The New New Journalism

Some events of interest in crypto fintech during the summer:

Number 9:

Square SQ obtained a crypto license.

From the NYS Department of Financial Services:

“DFS is pleased to approve Square’s application and welcomes them to New York’s expanding and well-regulated virtual currency market,” said Superintendent Vullo. “DFS continues to work in support of a vibrant and competitive virtual currency market that connects and empowers New Yorkers in a global marketplace while ensuring strong state-regulatory oversight is in place.”

“We are thrilled to now provide New Yorkers with Cash App’s quick and simple way to buy and sell bitcoin,” said Brian Grassadonia, Head of Cash App. “Square and the New York State DFS share a vision of empowering people with greater access to the financial system and today’s news is an important step in realizing that goal.”

It was barely more than half a year ago when Square’s Cash App bitcoin trading tool was pushed live for some users, allowing for trading only.

The other 8 licensees include: Xapo, Inc., Genesis Global Trading Inc., bitFlyer USA, Coinbase Inc., XRP II and Circle Internet Financial, and charters to Gemini Trust Company and Paxos (formerly itBit Trust Company).

Interested in getting bitlicense? There are hurdles.

The Hedge Fund Law Blog summarized the filing challenges for the bitlicense , which helps to explain why it’s still early days with not even a dozen approvals.

“In order to receive the license, an applicant must complete a 30-page Application for License to Engage In Virtual Currency Business Activity and pay a $5,000 application fee. The application requires information on the history of the business, its owners and operators, operational items, financials, information on AML procedures, and information on its general compliance processes. In total the application is fairly onerous and costly and will likely deter many potential companies for applying for the license. Few BitLicenses have actually been granted to date, and those that have been granted were to major players in the industry such as Coinbase and Ripple.”

In this instance Square’s win of license also gave Genesis Trading an opportunity to reveal its collaboration in Square’s move into NYS bitcoin trading.

By way of background, here was a Davis Polk review of the original July 2014 draft of rules. In the wake of the Bitlicense ‘s rules, was a departure of crypto trading firms but perhaps the tide is slowly coming back to New York’s shores.

Reporter Michael del Castillo wrote on Forbes about another new potential development: Ethereum futures

“[O]n stage last week, SEC director William Hinman spoke ten magic words that brought that clarity and have sent much of the cryptocurrency world into a tizzy: “Current offers and sales of ether are not securities transactions.”

“Cboe president Chris Concannon was on a flight from Chicago when he heard the news and tells Forbes the first thing he did was call his director of communications to prepare for a deluge of requests from the media. The moment he and his team had been waiting for had finally happened, and it was time to act.”

There are Bitcoin futures supported by the exchanges but that was it. SEC director Hinman’s remarks last week at a Yahoo conference may have cracked open the door for more crypto futures instruments.

And just like with Square, Gemini Trust in the mix via its partnership with The CBOE, which provided the price data underlying trading of the CBOE’s XBT bitcoin futures contract. As for whether exchange CME will also get into this market, Castillo offers a potential hint based upon recent history regarding CME partner Crypto Facilities:

“Long before CME Group had launched bitcoin futures, its partner, Crypto Facilities, had started offering the contracts, and it continues to expand its related services. Founded in 2015, the London-based startup has been years ahead of the curve in the cryptocurrency futures space. Overseen by the less stringent U.K. regulator, the Financial Conduct Authority (FCA), as far back as October 2016 Crypto Facilities had started trading XRP futures, and last month, just a week before CME Group revealed its ether indices, Crypto Facilities launched the first regulated ethereum futures using those same indices.”

Kyle Semani confirmed that Multicoin Capital is collaborating with Coinbase on third party custody solutions.

Voting has begun for Zcash foundation governance process, during which the Governance Panel will select two new board members, and self-nominated board candidates include Amber Baldet

She has submitted comment thread to detail her objectives which Zooko Wilcox had shared on twitter.

“###Why I want to be on the Board
 To be honest, I was asked to nominate myself by four separate members of the current Board & community leadership. It wasn’t something I realized was open to the general public previously, and I couldn’t care less about aggregating power or experimenting with community governance.”

“I would really like to see this Foundation do something very meaningful for privacy at a global scale. Ensuring that the mission is driven from what the community wants is important, but a great mission with no execution capability is no mission at all. Pretty much all I do is get shit done, and I am all over the world talking about this stuff to people that can help deliver on the organization’s goals. It seems like we should make it official.”

“###Thoughts on decentralization
 Much like privacy, this isn’t a binary on/off thing. From a governance perspective, decentralized governance tends to evoke images of direct democracy, which is great when you have an informed populous, and less good when people are ill-informed or single-issue voters. I abhor the cult of personality and appeals to authority all over the crypto space (which is why I’m not telling you who asked me to nominate myself; my work in the space is sufficient qualification as is), but also recognize that most people are not deep experts in the fields that are necessary to have an informed opinion. Thus, some following of qualified “thought leaders” is a useful heuristic. So… maybe? It’s incredibly important to try to stay as decentralized and open as possible, while recognizing that the worst outcome is a failure to move forward because of a complete lack of actionable leadership.”

Baldet’s talk about privacy preserving decentralized networks.

The Foundation should endeavor to establish the official Zcash mascot as one of the following choices: - Zeal, a collection of Zebras - Waterbear - Squirrel - Axolotl - A Talking Horse

Colorado Sun crowdfunded venture for journalism started by Denver Post journalists

“The Colorado Sun is a community-supported, journalist-owned team focused on investigative, explanatory and narrative journalism for a state in the midst of a massive evolution. Our goal is to inform, engage and entertain readers from the Western Slope to the Eastern Plains and up and down the Front Range by shining light on the news that matters. The Sun will cover the stories that others miss, from politics, business and the environment to what it means to live the Colorado lifestyle.

Oh, and there won’t be any ads.”

But that’s not all. From Fortune’s coverage of the new new journalism:

“The new publication will have a conventional website whose data will be written permanently into the secure, distributed digital ledger known as the blockchain. Civil Media will offer a grant to the the Colorado Sun, so it can cover its expenses. Note that Civil is backed by Consensys, a Brooklyn-based blockchain software company.”

Fortune also did a piece on Civil, in a May 2, 2018 story, citing a former colleague, Mathew Ingram’s succinct explanation but let’s go to Mr. Ingram’s Columbia Journalism Review piece.

Civil, founded by Matthew Iles last year, is building what it hopes will be an open marketplace for journalists, scheduled to launch in the spring of 2018. The building blocks of the project are blockchains and a bespoke cryptocurrency, a system of “tokens” that will both fund the development of the platform and compensate writers and editors.”

“Civil’s infrastructure, including its version of a crypto-currency, is based on Ethereum. When the platform launches in the spring, it will do an “initial coin offering” that will give its staff — including a number of journalists the company is in the process of signing up as contributors — an ownership stake. And Civil tokens will also be used to pay journalists who distribute their content through the platform.

Bye “vultures”, hello the “crowd”.

(Yes, I used “new” twice, as in the “new new thing”, nevermind.)


Originally published at big-stack.com on June 18, 2018.