A member of the development team behind decentralized crypto exchange protocol Loopring recently reached out to Cornell professor and blockchain expert Emin Gun Sirer, for his thoughts on the future of DEXs. Sirer claimed that they have the potential to be even more secure and trustworthy than traditional Wall Street fiat trading.
Loopring offers the technology on which developers can build an efficient and secure decentralized exchange, and it also runs its own DEX with its native LRC crypto token. He contacted Sirer directly, asking “What do you think about current DEX technology?” and “What should DEX focus on in order to have mass community adoption?”.
Thanks for being a #DEX supporter and adopter #EminGunSirer. We are all technology driven believers. Build up trustworthy exchanges, lead Wall Street. @el33th4xor @loopringorg #Noncustodial #Loopring #blockchain #SEC #ETF pic.twitter.com/ov060X7a5C
Sirer started his reply by saying “I love DEXs”, before going on to point out a common misconception that currently exists regarding the trustworthiness of crypto exchanges compared to their fiat equivalents. He claims that the SEC repeatedly rejects crypto ETF proposals because of the potential for manipulation in existing crypto exchanges. However, fiat exchanges themselves are “total messes” and require multiple audits at different layers in order for them to function in a way that is resistant to manipulation.
Read more: Why hasn’t the SEC approved a Bitcoin ETF yet?
According to Sirer, the nature of cryptoassets means that DEX developers are in a position to build platforms that offer more trustworthy trading than that offered by Wall Street and other leading fiat exchanges. He believes they will be able lead the way in this field, and make traditional institutions see that “you all need to up your game and adopt our technology”.
What a Schwab-TD Ameritrade Merger Would Mean for Crypto
An acquisition of TD Ameritrade by Charles Schwab would change the landscape of the traditional brokerage industry – and it may have implications for the ongoing mainstreaming of cryptocurrency trading.
The companies are reportedly in talks, and while a deal is by no means confirmed, it would marry one of the few mainstream financial companies to embrace the crypto market with one whose stance is less clear.
Nebraska-based TD Ameritrade has been allowing clients to trade bitcoin futures contracts on the Chicago Mercantile Exchange (CME) since 2018. Moreover, it owns a stake in ErisX, a bitcoin spot and futures exchange that may allow ethereum and litecoin futures trading as well.
Speaking at CoinDesk’s Consensus in May 2019, the brokerage’s executive vice president Steven Quirk said there is high demand for digital assets among retail investors across different ages and registered investment advisors.
“We get calls, emails, 60,000 clients have traded something in this complex,” Quirk said.
Schwab, on the other hand, has not leaned in to crypto quite as much. The San Francisco-based firm did enable clients with futures accounts to trade Cboe Bitcoin Futures (XBT) on the StreetSmart Central or StreetSmart Mobile trading platforms as far back as April 2018, according to a statement from the firm. Cboe later phased out the product, however.
Also, one of Schwab’s directors, Chris Dodds, also sits on the board of crypto exchange powerhouse Coinbase.
However, as recently as September, Schwab pointedly said it had no plans to offer direct trading of cryptocurrencies, with a spokesman telling brokerage industry publication RIABiz: “Investors should view these currencies as a purely speculative instrument.”
CEO Walt Bettinger – who would remain at the top of the potential merged company, according to news reports – is known for being cautious, which also suggests the firm would remain standoffish about crypto.
“Schwab, similar to Vanguard, tends to be more conservative in their general approach,” said Kostya Etus, a portfolio manager at money management firm CLS Investments.
“They are more methodical in launching new products and evaluating new initiatives, having a longer term view and outlook, because they don’t want to abandon something that doesn’t work,” he said. “Another way to put it is that they are very cost-conscious.”
Neither TD Ameritrade nor Schwab has gone as far as Fidelity Investments, a close second to Schwab in traditional brokerage services, which earlier this year launched a crypto brokerage and custodian for institutional clients, Fidelity Digital Assets.
“Fidelity can be more experimental with crypto services than Charles Schwab and TD Ameritrade since it is privately held and more free of shareholders’ opinion over new investments than the other two public companies,” said Samuel Lee, a financial advisor at SVRN Asset Management.
If Schwab were to take over TD Ameritrade, the combined company could hold more than $5 trillion in assets with 20 million clients, compared to Fidelity’s nearly $8 trillion with some 30 million clients.
Merging them could increase the scale of their businesses and further reduce transaction fees to boost their position as two of the most cost-effective brokerage services providers in the industry, said Jeff Tjornehoj, director of Fund Insights at Broadridge, a U.S.-based financial services company.
“But it is still too early to tell how exactly the two firms would benefit from the deal,” Tjornehoj said.
And the same goes for how it would affect their limited involvement in crypto, though part of the allure for Schwab may be TD Ameritrade’s tech savvy.
“TD Ameritrade is a technologically advanced investment firm,” Lee said.
The Surprising Reason Why Blockstack Could Be America’s First Crypto IPO
Blockchain startup Blockstack is currently evaluating how to issue new tokens for general miners.
“The issuance of new tokens is the main issue here,” Blockstack CEO Muneeb Ali told CoinDesk. “Because within the U.S. we’re treating STX [tokens] as securities, if new tokens are being minted by the protocol and they’re being released in the ecosystem, we need a legal framework for them.”
That framework could include an initial public offering (IPO), he said.
In September, Blockstack became the first blockchain startup in the U.S. to raise money through a token offering approved by the Securities and Exchange Commission (SEC). Planning to activate the process of “mining” on the Blockstack blockchain early next year, Ali explained there are a few different ways new tokens could be issued to miners in a similarly legally-compliant and regulated way.
First, the company could issue stacks (STX) tokens to miners under a Regulation S offering. Under Regulation S, Blockstack would be free to mint new STX on the blockchain and issue STX to active miners on the platform without needing to receive approval from the SEC.
Granted, this also means mining on Blockstack would be restricted to non-U.S. persons and most likely locked for a period of a year and a day.
“That’s one way of starting mining [on Blockstack], which won’t be ideal in the sense that we don’t want to exclude U.S. people from it,” Ali said.
According to the blockchain attorney that represented Blockstack for its 2019 token offering, Robert H. Rosenblum of law firm Wilson Sonsini Goodrich & Rosati, there is the possibility of offering newly issued tokens to miners in the U.S. under an alternative category called Regulation D.
However, all miners under Regulation D must be accredited investors. What’s more, these investors would not be able to receive STX through mining for at least a year and a day.
To avoid such complications and open up miner participation to all interested persons in the U.S., Blockstack could host a second Regulation A token offering. While this would open up miner participation to both accredited and non-accredited investors in the U.S., Blockstack would be restricted to an issuance cap.
“The big problem with a Reg A offering is that you can’t sell more than $50 million worth of assets in any 12-month period,” said Rosenblum.
Once the process of mining launches on the Blockstack blockchain next year, the issuance of new STX tokens could exceed the $50 million limit, which is why Ali told CoinDesk he is considering a fourth option.
That is, taking the company public.
The fourth alternative is to file a Form S-1 with the SEC.
This would be equivalent to conducting an IPO for the company (as several other cryptocurrency startups have attempted in the last two months.)
Blockstack stated as much in its offering circular filed to the SEC in July:
“We currently anticipate registering the initial distributions of mined Stacks Tokens under the Securities Act using Form S-1, with the tokens initially being delivered to a wallet that we own so that we can require miners to make appropriate securities laws representations before they receive the mined tokens, as well as ensure our compliance with anti-money laundering laws and know-your-customer requirements.”
While registering STX as publicly-traded shares in the U.S. does open up participation for general mining to U.S. persons, Ali said going through with an IPO requires “a lot more work” than the other options.
For starters, even with the SEC’s approval to conduct an IPO, Blockstack would likely need to receive additional state-by-state approval to issue newly mined STX tokens.
While this is not a requirement of traditional securities, cryptocurrencies according to Rosenblum fall into “a strange category” of securities law requiring the approval of state securities regulators as well as federal.
“It will be expensive but no one knows for sure how much it’s going to cost to deal with various states,” Rosenblum said. “No one knows for sure if every state is even going to give their approval. It’s possible that if you did a registered offering for Form S-1, you would be approved to sell in some but not every state.”
Even so, Rosenblum views the approval of an S-1 for a blockchain startup as simply a matter of time given the continuous growth of the industry. Whether Blockstack will be the first blockchain startup to go public is an unanswered question.
“I would say we are far from deciding on any option right now,” said Ali.
Playing the long game
Outside of Regulations S, D, A and taking the company public, blockchain attorney Matthew E. Kohen said there is a possibility in the long-term of U.S. regulators deeming Blockstack’s STX token as no longer a security.
“At which point, a lot of these ongoing requirements Blockstack has to deal with disappear,” said Kohen.
Blockstack states as much in its initial offering circular by disclosing that the company itself could determine that STX “are no longer securities for purposes of federal securities laws.”
“We anticipate [this] to occur sometime in 2020 or the first quarter of 2021, within a year following the introduction of mining to the Blockstack network,” the offering circular states.
How Blockstack would go about making this determination and which U.S. regulators would bless such a decision is presently unclear, Kohen said.
At the same time, issuance of tokens through mining is a murky subject matter altogether, according to Rosenblum, who sees “a massive gulf” between what the SEC has said and what they’ve actually done in terms of enforcement.
“It’s difficult to understand and reconcile that the SEC views most or virtually all tokens – other than bitcoin, ether, possibly EOS and a few others – as securities with their absolute reluctance and failure to take any action on all sorts of cryptocurrency issuers that do pay miners [in the U.S.] currently but have not registered those tokens,” Rosenblum said. “Where is the SEC in all of this? What are they doing?”
Still, in light of what the SEC has previously done and stated especially on cryptocurrencies such as bitcoin and ethereum, the possibility remains for STX to one day be categorized as a commodity asset rather than a security.
Even so, Ali explained that Blockstack will only activate mining under a clear legal framework in order to avoid regulatory uncertainty.
“What we solved for with the Reg A was how to do an offering where the general public can participate. Turning mining on has related issues but it’s not the same problem. It’s a different problem,” Ali said. “The end framework [for mining] might end up looking different.”
Blockstack CEO Muneeb Ali image via CoinDesk archives
Crypto News Ripple Price Analysis: XRP/USD recovery hits a snag at $0.2550
Ripple price analysis: XRP/USD recovery hits a snag at $0.2550, where to next?
Ripple is slightly in the green towards the end of the Asian session on Thursday. The bullish action started around $0.2502 but fizzled out at $0.2533. The third-largest crypto has explored intraday lows around $0.2486. However, XRP is still holding on to the subtle 0.63% gains on the day.
XRP/USD is doddering at $0.2525 above the immediate 50 Simple Moving Average (SMA) support on the 1-hour chart currently at $0.25144. The recovery stalled shy off $0.2550 leaving the resistance at the 100 SMA at $0.2564 untested.
g towards the average. Read more…
Top 3 price prediction BTC, ETH, XRP: Bears put a heavy paw on the market
XRP/USD is currently trading at $0.2452. The third-largest coin has lost over 2% of its value in the recent 24 hours amid the resumed sell-off on the cryptocurrency market. XRP/USD hit the intraday low at $0.2429 before new buyers popped in and saved the day.
The coin has been declining steadily since it hit $0.3100 on November 7. The downside momentum has been strengthening amid growing bearish sentiments on the broader market. Looking technically, the next strong support is located at $0.2400 (October 18 low). Once it is out of the way, the sell-off may continue towards September low at $0.2168. Read more…
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