Weekly Roundup 12/25/20 (FinCEN’s proposed rules, the SEC takes aim at Ripple, predictions for 2021) (EP.161)

Nic and Matt return for a special Christmas episode of OTB. In this episode: 

  • Jay Clayton steps down and Elad Roisman takes over as interim SEC Chair
  • We analyse the Treasury’s proposed rule on VASPs and crypto transactions
  • Why the FinCEN rule imposes greater demands on crypto transactions than cash as far as surveillance is concerned
  • Are the proposed workarounds between VASPs and defi asset pools viable?
  • Our book recommendation on the politicization of the Treasury
  • Our analysis of the SEC complaint against Ripple
  • How bad is the SEC complaint for Ripple?
  • Some of the most damning quotes from the SEC complaint
  • The significance of the SEC extending the statute of limitations with Ripple
  • Our theory for why the SEC waited so long to sue Ripple
  • Implications for exchanges facilitating the trading of XRP
  • A development on 15c3-3
  • We revisit our predictions for 2020 and issue new predictions for 2021

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Sponsor notes: 

Withum is a forward-thinking, technology-driven advisory and accounting firm committed to helping our clients be more profitable, efficient and productive in today’s complex business environment. Our Digital Currency group is proud to partner with members of the cryptocurrency community. Get to know us at withum.com/crypto.

 

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Matt Hougan (Bitwise) on the prospects for a Bitcoin ETF in 2021 (EP.160)

Matt Hougan, the Chief Investment Officer at Bitwise Asset management joins the show. In this episode we discuss:

  • Bitwise’s new OTC trust product “BITW”
  • The state of play for cryptoasset adoption in the RIA channel
  • The evolving thesis for Bitcoin and other cryptoassets
  • Prospects for a Bitcoin ETF in 2021

To learn more visit Bitwise Asset Management and follow Matt on Twitter.

Sponsor notes:

Withum is a forward-thinking, technology-driven advisory and accounting firm committed to helping our clients be more profitable, efficient and productive in today’s complex business environment. Our Digital Currency group is proud to partner with members of the cryptocurrency community. Get to know us at withum.com/crypto.

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Amber Scott (Outlier Canada) on crypto-bank relationships in Canada (EP.158)

Compliance expert Amber Scott joins the show to explain why crypto-firms are systematically excluded from the bank sector in Canada. In this episode: 

  • Our objective in launching a series on bank suppression of the crypto industry
  • The current bank landscape in Canada
  • Why crypto firms struggle to get access to banking in Canada
  • Why money transmitters face a more burdensome treatment from banks
  • What derisking is and why it is so common
  • Whether MSBs and crypto firms deserve the treatment they get from banks
  • Why derisking often forces crypto firms into using grey market payment processors, exposing them to the risk of fraud
  • The underlying reasons for reluctance on the part of banks to bank crypto firms
  • Why informal guidance from regulators is so critical
  • How US regulations are structurally imported into Canada
  • How a service provider called Central One imports US policy for thousands of credit unions

Follow Amber on Twitter and learn more about Outlier Canada

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Weekly Roundup 12/18/20 feat. a pseudonymous fixed income trader (Our MSTR mea culpa, are CME futs cursed, what isn’t a commodity?) (EP.159)

Matt and Nic return to cover a blockbuster week of ATHs. We invite a pseudonymous bond trader to give a rebuttal to our somewhat misguided take on the Microstrategy bond offering on last week’s episode. Also in this episode: 

  • Our take on the STABLE Act (again)
  • Are balances on the Dunkin and Starbucks apps stablecoins
  • Paxos raises a $142m Series C
  • SBI acquires B2C2
  • The BITW premium explodes
  • Ruffer’s telling reasons for investing $740m in Bitcoin
  • The CME announces ETH futures
  • … three years to the day since the CME Bitcoin Futures launch
  • Did the CME futures pop the 2017 Bitcoin bubble?
  • We screwed up with our take on the MSTR bond offering
  • We revisit the MSTR convertible note
  • Who is buying the MSTR fixed income offering?
  • Coinbase inches towards an IPO
  • ErisX introduces sports-based futures contracts
  • Why onions aren’t a commodity
  • Bitcoin values are American values

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Muneeb Ali (Blockstack) on Bitcoin-based Smart Contracts (EP.156)

Muneeb Ali, cofounder of Blockstack, joins the show to talk about the launch of Stacks 2.0 and its evolution from a securities offering to a freely tradable instrument in the U.S.

  • New developments with Stacks and a novel legal opinion
  • What constitutes sufficient decentralization and how Blockstack took cues from regulators
  • Why Blockstack felt empowered to list their token on public US exchanges
  • The current state of Blockstack governance
  • Reflections on Ethereum’s purported transmutation
  • How Blockstack did the first reg A+ securities offering for a cryptoasset
  • Why securities registration is worthwhile for token issuance
  • Whether the SEC disclosure framework is suitable for the issuance of a token
  • Alternative disclosure and securities offering frameworks for registered token issuance
  • Whether Blockstack was willing to treat Stacks as a security in perpetuity
  • Why security tokens haven’t taken off in the US so far
  • The evolution from Stacks 1.0 to Stacks 2.0, and the differences between the two
  • Why Blockstack chose to build on Bitcoin, and how they managed to do so in an efficient manner
  • Why Blockstack chose not to build a distinct chain in its own right
  • Why Bitcoin’s inflexibility as a base layer makes it a suitable underlying protocol
  • How Muneeb thinks about Stacks value accrual
  • Blockstack’s transaction-based consensus mechanism relying on Bitcoin
  • Why Blockstack chose not to use OP_RETURN
  • The relationship between Blockstack usage and BTC value accrual
  • Muneeb’s response to the criticism of their regulated token issuance model

Key readings:

Sponsor notes:

Withum is a forward-thinking, technology-driven advisory and accounting firm committed to helping our clients be more profitable, efficient and productive in today’s complex business environment. Our Digital Currency group is proud to partner with members of the cryptocurrency community. Get to know us at withum.com/crypto.

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Weekly Roundup 12/11/20 (What’s Treasury up to?, MSTR’s bond offering, would the STABLE act kill Dunkin?) EP.157

Nic and Matt return to cover an avalanche of news and deals. In this episode: 

  • Blockstack’s transmutation
  • Bitso raises $62m
  • Matt breaks down the Microstrategy bond offering
  • Mass Mutual buys $100m worth of Bitcoin through NYDIG
  • A bipartisan group of Representatives asked Jay Clayton for clarity on broker dealer custody for cryptoassets
  • The looming crackdown on noncustodial wallets from Treasury
  • The effect of requiring transactional metadata for on-chain transactions
  • More comments on the STABLE Act
  • Matt’s plan to primary Stephen Lynch via Dunkin talkin points
  • Would the STABLE Act kill Dunkin Donuts?
  • Why Bitcoin is pristine collateral
  • Fidelity Digital Assets partners up with BlockFi for Bitcoin-backed loans
  • Bitwise launches their index fund
  • Square goes carbon neutral
  • Standard Chartered launches a crypto trading service
  • Singapore’s DBS bank launches a crypto exchange
  • Paxos and BitPay file for national bank charters
  • The Financial Times changes their tune on BTC
  • Our call for data portability legislation

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Mustafa Yilham (Bixin) on the industrial Bitcoin miner perspective (EP.155)

Mustafa Yilham, VP of global business development at Bixin, joins the show. Bixin is an early Asia-based Bitcoin miner; they operate a popular wallet app, and they run a Bitcoin-denominated quant fund of funds. We cover prevailing myths around industrial Bitcoin mining and the reality of sourcing energy at competitive prices for mining. In this episode: 

  • The story behind Bixin’s Bitcoin-denominated quant fund
  • How Bixin’s fund of fund employs a Bitcoin benchmark
  • Why Bixin as a firm is not market neutral and does not hedge their mining operation
  • Whether miners have a procyclical or countercyclical effect on the price of Bitcoin
  • Whether or not miners are fundamentally long Bitcoin
  • The key considerations for finding a good source of electricity for mining
  • Why Central Asia, Russia, and North America are promising locations for mining
  • Why Mustafa expects more hashpower to end up in North America in the near term
  • The factors leading Mustafa to expect less hashrate concentration in China in the future
  • Whether the CBECI mining map is a reliable guide to where mining is located
  • Miner attitudes to Iran and OFAC
  • Current electricity prices required to competitively mine
  • What sold out hardware means for the price of Bitcoin
  • Was the hashrate drop earlier this year was due to the seasonal migration of hashpower in China?
  • Bixin’s approach to seasonal electricity costs
  • Whether the withdrawal issues at Okex and Huobi prevented miners from selling and ’caused’ the recent Bitcoin rally
  • Mustafa’s take on the “China controls Bitcoin” narrative
  • Why Bitcoin mining is getting progressively more decentralized
  • Why Bitcoin miners are positively disposed towards Bitcoin
  • Whether Bixin plans to support Taproot
  • Mustafa’s view on who controls Bitcoin
  • Mustafa’s experiences in Turkey and why it is so popular there
  • Why central asian and post-Soviet households like gold

Sponsor notes: 

Withum is a forward-thinking, technology-driven advisory and accounting firm committed to helping our clients be more profitable, efficient and productive in today’s complex business environment. Our Digital Currency group is proud to partner with members of the cryptocurrency community. Get to know us at withum.com/crypto.

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Weekly Roundup 12/04/20 (The Dastardly STABLE Act, USDC partners with Visa, Larry Fink evolves on Bitcoin) (EP.154)

In this week’s episode, Nic and Matt torch the STABLE Act cosponsored by their local representative Stephen Lynch (MA-8). Also covered: 

  • Stephen Lynch and Rashida Tlaib’s STABLE Act
  • What the STABLE Act requires of fintech providers hosting user balances
  • What stablecoin issuers are not like banks
  • Why the STABLE Act would be disastrous for competition in the Fintech space
  • Why the moral positioning for the bill is internally inconsistent
  • The prospects for the STABLE Act
  • Why legislation like the STABLE Act will likely become
  • USDC partners with Visa, and what it means for the industry
  • Why the USDC-Visa partnership solves a critical issue that the industry has had for years
  • BlockFi announces a Bitcoin-back credit card
  • Larry Fink starts to shift his tone on Bitcoin
  • Garry Cohn’s bizarre new Bitcoin critique
  • Our takeaways from the BCAP Bitcoin survey
  • Will Bitcoin outlive the Euro?

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Mathias Imbach (Sygnum Bank) on the importance of crypto banking (EP.153)

Mathias Imbach, cofounder and CEO of Sygnum Singapore, joins the show. In this episode: 

  • How Mathias came to cofound Sygnum
  • The state of affairs in Crypto Valley in Switzerland today
  • Why crypto banks are necessary and useful
  • Why the company is split – cofounders, offices, and investors – between Zurich and Singapore
  • Why Switzerland and Singapore are suitable venues for a crypto bank
  • The case for convergence between traditional financial infrastructure and the crypto industry
  • Sygnum’s product lineup
  • Current regulatory attitudes towards the crypto industry in Switzerland in Singapore
  • How Sygnum compares with the entities receiving crypto-focused bank charters in the U.S.
  • Switzerland’s treatment of the Travel Rule for crypto exchanges
  • The current state of EU regulations for crypto service providers
  • How Sygnum created a tokenized Swiss Franc backed directly by central bank liabilities
  • Differences between tokenized base money and a state-issued CBDC
  • Mathias’ explanations for the renewed enthusiasm for Bitcoin in the market
  • Why Bitcoin and gold decoupled earlier this year – and how Bitcoin stopped being a rates bet
  • How Sygnum’s clients are an indication of the changing nature of Bitcoin investors

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Pelle Brændgaard (Notabene) on how crypto service providers are dealing with the Travel Rule (EP.152)

Pelle Brændgaard, the cofounder and CEO of Notabene, an enterprise software company building compliance tools to enable trusted cryptoasset transactions between financial services firms, joins the show. In this episode we discuss:

  • Pelle’s early work in distributed systems and pre-bitcoin cyber-cash projects
  • His path to cofounding Uport and his views on decentralized identity systems
  • The vision of Notabene how the firm is addressing the compliance needs of financial institutions and crypto exchanges and brokerages
  • His views on the travel rule and how this will impact market participants
  • The unhosted/hosted wallets debate

Learn more about Notabene here.

Sponsor notes:

Withum is a forward-thinking, technology-driven advisory and accounting firm committed to helping our clients be more profitable, efficient and productive in today’s complex business environment. Our Digital Currency group is proud to partner with members of the cryptocurrency community. Get to know us at withum.com/crypto.

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Weekly Roundup 11/27/20 (What we are thankful for, USDC in Venezuela, is GBTC behind the rally?) (EP.151)

Nic and Matt return with a special Thanksgiving issue of OTB. In this episode: 

  • How Castle Island VC was almost Brink VC
  • The difference between financialized walled-garden gold and its Bitcoin equivalent
  • How USDC is being used in Venezuela via AirTM
  • How stablecoins are now tools of geopolitical power projection
  • Vaneck lanches an ETN on the Deutsche Bourse
  • Is GBTC the cause of the rally
  • The OCC proposes fair access to banking services
  • A few people and organizations that we’re thankful for
    • Chaincode Labs
    • Bitcoin Optech
    • Greg Schvey and Adam Ludwin
    • Caitlin Long
    • John Pfeffer
    • Fidelity Digital Assets
    • Coin Center
    • Three Arrows and CMS Holdings
  • Should thanksgiving turkey trots be cancelled?

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Sponsor notes:

Withum is a forward-thinking, technology-driven advisory and accounting firm committed to helping our clients be more profitable, efficient and productive in today’s complex business environment. Our Digital Currency group is proud to partner with members of the cryptocurrency community. Get to know us at withum.com/crypto.

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John Newbery (Brink) on funding Bitcoin development (EP.150)

John Newbery, Bitcoin Core developer and founder of Bitcoin Optech, announces an independent nonprofit organization to support Bitcoin development, Brink. Donate here.

In this episode, we discuss the formation and mandate of Brink, as well as the developer funding context that we find ourselves in. Covered in the episode: 

  • John Newbery’s core developer story and how he came to found Brink
  • Why John left Chaincode and struck out on his own
  • Brink’s mandate and foundational purpose
  • Lessons learned from the Bitcoin Foundation
  • The future of Bitcoin Optech
  • The state of funding for Bitcoin development
  • The accessibility of Bitcoin protocol development today
  • Does the existence of financial incentives cannibalize the intrinsic motivation to work on open source?
  • Why John works on Bitcoin
  • Why ossification might be more remote than we expect
  • Whether Bitcoin’s developer funding model exposes it to corporate capture
  • The political implications of Bitcoin having a sole reference implementation
  • The importance of distinguishing the validation element of Bitcoin Core from the other components
  • Is Bitcoin protocol dev meritocratic or technocratic?
  • Why the structurelessness of Bitcoin core dev raises the barriers to entry
  • Is Bitcoin protocol development adequately funded right now?
  • Does developer funding equate to influence in the Bitcoin protocol development
  • The dispersion of Bitcoin protocol development influence

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Weekly Roundup 11/20/20 (Claytons leave the SEC, the not so quiet Quiet Rally, Bitcoin interest rates) (EP.149)

Nic and Matt return for deals and news of the week. In this episode:

  • Nic’s appearance on Bloomberg TV
  • Is Jay Clayton’s departure good for the SEC?
  • Our dark horse pick for SEC Chair
  • Scaramucci’s fund considers a Bitcoin position
  • Is Binance decentralized?
  • How are enterprise blockchains still going?
  • How Bitcoin is akin to gold in the 1970s
  • Bitcoin’s changing narratives as a strength
  • How our quiet rally isn’t quiet
  • How to interpret the BTC inflow into GBTC
  • Why digital asset interest rates are structurally high

 

Sponsor notes:

Withum is a forward-thinking, technology-driven advisory and accounting firm committed to helping our clients be more profitable, efficient and productive in today’s complex business environment. Our Digital Currency group is proud to partner with members of the cryptocurrency community. Get to know us at withum.com/crypto.

 

Sponsor notes:

Withum is a forward-thinking, technology-driven advisory and accounting firm committed to helping our clients be more profitable, efficient and productive in today’s complex business environment. Our Digital Currency group is proud to partner with members of the cryptocurrency community. Get to know us at withum.com/crypto.

Check out this episode!

Parker Lewis (Unchained Capital) on unlocking Bitcoin’s potential with multisig (EP.148)

Parker Lewis, head of Business Development at Unchained Capital, and author of the Gradually then Suddenly series, joins the show. In this episode: 

  • Parker’s progress in our Bitcoin fantasy league
  • Our views on how Bitcoin gives purpose
  • Bitcoin’s relationship to the prospects for fiscal spending
  • How the virus may have been an excuse to extend the fragile credit system
  • Why Covid-related spending is often framed in moral, rather than economic terms
  • How Bitcoin eschews academic debates
  • Unchained’s mission and current product focus
  • Why on-chain multisig is such a good blend of resilience and convenience
  • What multisig enables in terms of bitcoin applications
  • What credit in a Bitcoin economy looks like
  • Bitcoin as a corporate treasury asset and how Unchained is building for that future
  • Why Bitcoin custody is fundamentally hard
  • Parker’s feelings on avowed Bitcoiner Cynthia Lummis being elected to the Senate
  • How Bitcoin aligns with American values
  • Parker’s favorite piece in his Gradually then Suddenly series

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Weekly Roundup 11/13/20 (Cred insolvency, Zelleification in Venezuela, Can Bitcoin be 6102’ed?) (Ep.147)

Nic and Matt return for news and deals of the week. In this episode: 

  • Cred files for bankruptcy
  • Why Bitcoin banking is uniquely robust
  • Why we should not be discouraged by the occasional failure of Bitcoin banks
  • The ECB looks to create a CBDC within 2-4 years
  • Gary Gensler’s influence on the Biden administration
  • XRP’s fate hangs in the balance
  • Stephen Lynch’s letter to Brian Brooks criticizing his stance on crypto
  • Zelle’s influence in Venezuela and the reality of crypto-dollarization
  • Why crypto-dollarization is more sustainable than physical dollarization
  • Our response to Ray Dalio’s critiques of Bitcoin
  • Why Bitcoin can’t be ‘Order 6102’ed’ today
  • Valid and less valid critiques of Bitcoin

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Alan Lane (Silvergate) on banking the cryptoasset industry (EP.146)

Alan Lane, the CEO of Silvergate Financial joins the show. In this episode we discuss:

  • How Silvergate came to bank blockchain companies.
  • The challenges and opportunities in providing services in this fast growing market.
  • Silvergate Exchange Network – how this product is driving growth and solving customer pain points.
  • Alan’s perspectives on stablecoins and how Silvergate plans to play in this area.
  • Views on the long-term opportunities for digital asset custody and lending.

 

To learn more about Silvergate visit their website.

 

Sponsor notes:

Withum is a forward-thinking, technology-driven advisory and accounting firm committed to helping our clients be more profitable, efficient and productive in today’s complex business environment. Our Digital Currency group is proud to partner with members of the cryptocurrency community. Get to know us at withum.com/crypto.

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Weekly Roundup 11/06/20 (Blockchain voting, a $1B Bitcoin forfeiture, election outcomes and inflation) (EP.145)

Matt and Nic cover deals and the news of the week. In this episode:

  • The latest on Matt’s bike saga
  • Possible election outcomes and the prospect for inflation
  • How Kelly Loeffer’s runoff election might affect Bitcoin
  • Were prediction markets vindicated by the election?
  • The government seizes $1b worth of Bitcoin
  • Why the seized bitcoin is good news
  • Our take on the big Blockchain Voting Debate
  • Our explanation for why people are curious about blockchains for voting
  • Longtime Bitcoin holder Cynthia Lummis joins the Senate
  • Decentralized storage tech is reaching geopolitical levels of importance
  • Why Bitcoin’s demand in 2020 might be more enduring than the demand in 2017

Content mentioned in this episode: 

Sponsor notes:

Withum is a forward-thinking, technology-driven advisory and accounting firm committed to helping our clients be more profitable, efficient and productive in today’s complex business environment. Our Digital Currency group is proud to partner with members of the cryptocurrency community. Get to know us at withum.com/crypto.

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Bruce Fenton (Chainstone Labs) on the paradox of governance tokens (EP.139)

Bruce Fenton, founder of the Satoshi Roundtable and Chainstone Labs, joins the show to talk security tokens and tokens-which-are-securities. In this episode:

  • About Bruce’s company Chainstone labs
  • How the Bitcoin Roundtable is intertwined with Bitcoin history and the blocksize debate
  • Coinbase’s ongoing rapprochement with Bitcoiners
  • Why longevity is so difficult in the crypto industry
  • Are we living in the most historically aggressive period in terms of regulatory oversight into the industry?
  • What Bruce makes of Heath Tarbert’s comments on Ethereum
  • Continuing uncertainty about the status of Ripple’s XRP – and what possible outcomes look like
  • The prospects for token S1s and a genuine standard of disclosure for new issuances
  • Why trying to avoid securities laws causes token issuers to create subpar instruments
  • How much control do governance tokens really give tokenholders?
  • Why Bitcoin isn’t sufficient to resist the state alone – and what tools are part of that toolkit
  • Why the US should consider disrupting itself with regards to managing the world’s financial system
  • Why some people like security tokens for the wrong reasons
  • The logistical advantages of tokenizing a security
  • How security tokens could open up mid-size businesses which don’t have access to capital markets

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Josh Cincinnati on the challenge of blockchain governance (EP.144)

Josh Cincinnati, former Executive Director of the Zcash Foundation, joins the show to talk about his tenure at that organization, and lessons he’s taken from the experience. In this episode: 

  • The genesis of the Zcash Foundation
  • Prior foundation mistakes that Josh sought to avoid
  • The difference between governing a non-cryptocurrency FOSS project and an open source protocol with an explicit monetary element
  • Why Josh chose to step down from the Zcash Foundation
  • How the monetary distribution of Zcash was initially devised and how the founder’s reward became a developer fund
  • The dynamics around the trademark sharing in Zcash
  • Trademarks as a last resort tool of power in blockchain governance
  • How public blockchains are ‘Marxist in their goals, Leninist in their implementations’
  • How the mandate of the Zcash Foundation was broader than simply the Zcash ecosystem
  • The current outlook for funding Zcash development
  • The subtle change in the social contract underlying development funding
  • Why poorly formalized social contracts risk opening up projects to capture
  • How ‘aid dependency’ is relevant to blockchain governance
  • Why blockchain insiders hide the true mechanisms of power
  • Why coin votes might be more of the output of power rather than the input
  • Josh’s advice to a founder trying to devise funding for a novel cryptocurrency
  • Why Rawls’ Veil of Ignorance is so important in determining initial conditions for a monetary protocol
  • What Josh is working on now
  • The story behind PonzICO.win
  • Why there is no good satire in the crypto industry

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Boaz Sobrado on Bitcoin adoption trends in Cuba (EP.173)

Boaz Sobrado, data analyst and the founder of whynotcuba.com  joins the show to talk about trends in Cuban Bitcoin adoption. In this episode: 

  • How Boaz came to start an ecommerce company in Cuba and how Bitcoin became relevant to him
  • The structure of Bitcoin trading markets in Cuba
  • How Bitcoin currently trades in Cuba
  • Drivers of Bitcoin adoption in Cuba
  • Why Cuba until recently hasn’t been known as an important jurisdiction for Bitcoin
  • Why Cuba doesn’t show up in the typical proxies for bitcoin usage
  • Why internet penetration in Cuba is accelerating Bitcoin adoption
  • How Bitcoin is incorporated into the remittance flow in Cuba
  • How the Cuban regime thinks about and talks about Bitcoin
  • The history of Cuba’s three simultaneous sovereign currencies
  • How the sovereign currency transitions are a means for the government to acquire hard currency at the expense of savers
  • The key factors supporting a wave of Bitcoin adoption in Cuba today
  • How Bitcoin markets permit the pricing of the black market peso rate

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