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SEC Commissioner says ‘safe harbor’ laws would’ve made ICO problems worse



SEC Commissioner says ‘safe harbor’ laws would’ve made ICO problems worse

Instead of a safe harbor for crypto firms, SEC Commissioner Caroline Crenshaw called for a “bridge” in which crypto firms work with the SEC to determine compliance plans.

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SEC Commissioner says 'safe harbor' laws would've made ICO problems worse

Caroline Crenshaw, a commissioner at the U.S. Securities and Exchange Commission (SEC) has said the “safe harbor” proposal would have exacerbated the problems seen during the initial coin offering (ICO) boom of 2017 and 2018.

Crenshaw made the remarks during the annual “SEC Speaks” event this month, and posted her speech to the SEC website on Oct. 12. The Commissioner argues that the impact on investors and markets would have been far greater if safe harbor provisions were in place at the time:

“I think the results would have been even worse for investors and the markets. ICOs and other digital asset offerings raised billions from investors, but most never delivered on their promises. Investors suffered the losses.”

“And I think it is not a coincidence that these problematic offerings pre-dated and continued through the beginning of a multi-year downturn in the value of digital assets, sometimes known as the crypto-winter,” she added.

The safe harbor proposal has been advocated by crypto-friendly SEC commissioner Hester Peirce. The proposal seeks to grant network developers a three-year grace period to build a decentralized network without fearing SEC legal action, but has yet to be embraced by most of the other commissioners.

Peirce, or “Crypto Mom”, put forward a revised version earlier this year in March. Cointelegraph reported on Oct. 5 that North Carolina House Representative Patrick McHenry also put forward a three-year safe harbor proposal in a draft bill of the “Clarity for Digital Tokens Act of 2021.”

Crenshaw argues that instead of pushing the crypto sector towards compliance, the safe harbor proposal would put investors’ capital at further risk as crypto tokens would be deemed outside of the jurisdiction of the SEC for “several years.”

“I also worry that relaxing regulatory requirements in markets prone to investor protection failures, limited investor redress options because of pseudonymity and disintermediation, and market manipulation, cannot sustain investor confidence or yield lasting broad adoption,” she said.

Related: Gensler confirms SEC won’t ban crypto… but Congress could

Instead of a safe harbor, Crenshaw called for a “bridge” in which token issuers and other crypto firms work with SEC to outline plans for regulatory compliance, or discuss specific exemptions when they are deemed “appropriate,”:

“I believe that if market participants accept proactive responsibility for compliance, we can build a bridge that promotes innovation while preserving market integrity and providing the investor protections needed for these new markets to grow.”

“If you likely fall within our jurisdiction, work with us to describe your plan to comply or explain why some exemption is appropriate,” she added.

Crenshaw’s remarks also echo the sentiments of chair Gary Gensler, who has regularly called for crypto firms to work with the SEC and register with the regulatory body.

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Binance launches $1B BSC fund, BTC futures ETF approval could arrive soon, and Celsius raises $400M: Hodler’s Digest, Oct. 10-16



Binance launches $1B BSC fund, BTC futures ETF approval could arrive soon, and Celsius raises $400M: Hodler’s Digest, Oct. 10-16

Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.

Top Stories This Week

Binance to launch $1B fund to develop BSC ecosystem

Binance, the world’s biggest cryptocurrency exchange, announced an accelerator fund worth a whopping $1 billion this week. The funds will go toward supporting the development of the Binance Smart Chain ecosystem. 

Binance outlined that the 10-figure sum will be part of a tiered development model across four specialist areas: Talent Development, the Liquidity Incentive Program, the Builder Program and the Investment & Incubation Program.

The largest benefactor of the fund is said to be the Investment & Incubation Program, which will receive around $500 million, according to Binance. The branch will focus on multichain expansion in areas such as metaverses, gaming, virtual reality and artificial intelligence.

Coinbase follows FTX and Binance in launching NFT marketplace

Coinbase announced on Tuesday that it is launching an NFT marketplace later this year. The platform will initially support tokens from the Ethereum blockchain and will be launched in the U.S. before being expanded globally.

Given that Coinbase tallied around 68 million verified users and 8.8 million monthly active users in Q2, the firm’s new NFT platform could soon mount some serious competition to giants such as OpenSea.

Evidence of this was seen after the announcement, as sign-ups for the waitlist reached almost 1.1 million people within 48 hours. In contrast, data from DappRadar shows that OpenSea has a rolling 30-day average of 261,000 active users.

G7 leaders issue central bank digital currency guidelines

The Group of Seven (G7) forum, composed of the world’s seven largest advanced economic nations, discussed a totally centralized form of digital assets called central bank digital currencies (CBDCs) this week. The meeting resulted in the endorsement of 13 public policy principles regarding their implementation.

The G7 determined that any newly launched CBDCs should “do no harm” to the central bank’s ability to maintain financial stability, suggesting that harm to individual sovereignty by tracking one’s spending habits and programming their money is on the table.

Some of the CBDC-focused policies included mandates that the digital currencies must be energy efficient and fully interoperable on a cross-border basis, along with complementing the current cash-based system.

Crypto lending firm Celsius Network raises $400M

Crypto lending platform Celsius Network raised $400 million in an equity funding round led by Caisse de dépôt et placement du Québec and WestCap. The firm said it will use the fresh capital to double its headcount to around 1,000 employees and expand its offerings and products. 

“It’s not $400 million. It’s the credibility that comes with the people who wrote those checks,” Celsius Network co-founder Alex Mashinsky said in an interview with the Financial Times on Tuesday.

Another firm to close a capital raise was crypto risk management company Elliptic, which raised $60 million in Series C funding. The round was led by Evolution Equity Partners and included support from SoftBank Vision Fund 2, AlbionVC, Digital Currency Group, Wells Fargo Strategic Capital and SBI Group, to name a few.

Top engineers working on Facebook’s wallet jump ship to A16z’s crypto fund

Reports surfaced on Monday that two of the top engineers working on Facebook’s spooky digital currency project packed their bags and took a hike to venture firm Andreessen Horowitz (a16z).

The engineers who escaped the clutches of Mark Zuckerberg are named Nassim Eddequiouaq and Riyaz Faizullabhoy. The duo spent two years working on Facebook’s digital wallet dubbed Novi. Faizullabhoy will serve as the chief technology officer of a16z’s crypto division, while Eddequiouaq will take on the role of the chief information security officer.

“Andreessen Horowitz has shown an impressive dedication to advancing the entire crypto ecosystem over the past decade, and we jumped at the chance to join their premier team and provide technical support to their rapidly expanding portfolio,” Faizullabhoy said.

Winners and Losers

At the end of the week, Bitcoin (BTC) is at $60,687, Ether (ETH) at $3,817 and XRP at $1.13. The total market cap is at $2.44 trillion, according to CoinMarketCap.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Stacks (STX) at 38.94%, Perpetual Protocol (PERP) at 30.55% and Telcoin (TEL) at 24.63%.

The top three altcoin losers of the week are Arweave (AR) at -21.68%, Terra (LUNA) at -17.50% and Fantom (FTM) at -15.41%.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis.

Most Memorable Quotations

“Bitcoin is a lot less risky at $43,000 than it was at $300. It’s now established, huge amounts of venture-capital money have gone into it, and all the big banks are getting involved.”

Bill Miller, founder of Miller Value Partners

“I think the big difference between Ethereum and Bitcoin is that Bitcoin is a platform where the value of the ecosystem comes from the value of the currency but, in Ethereum, the value of the currency comes from the value of the ecosystem.”

Vitalik Buterin, co-founder of Ethereum

“I can say ‘I have a gold ETF or a Bitcoin ETF,’ but I’m storing that gold in my basement. Is the SEC going to allow that? Probably not. Unless companies can show they can custody it and actually address a lot of the issues Gensler specifically mentioned, it’s not going to work.”

Tad Park, founder and CEO of Volt Equity 

“I’m not a student of Bitcoin and where it’s going to go, so I can’t tell you whether it’s going to $80,000 or zero. But I do believe that there is a huge role for a digitized currency, and I believe that’s going to help consumers worldwide — whether it’s a Bitcoin or something else, or more of a governmental official digital currency, a digital dollar, that will play out.”

Larry Fink, chairman of BlackRock

“We haven’t even gotten to the parabolic growth part of Web 3, which is going to create untold wealth.”

Mark Yusko, CEO of Morgan Creek Capital

“The reason I own Bitcoin is because the U.S. government and every government in the western hemisphere is printing money now to the end of time.”

Barry Sternlicht, co-founder of Starwood Capital Group

“Broadly, we’ve gone through a long period of low inflation, and we’ve got central banks experimenting in uncharted territory with very, very loose monetary policy. It’s perfectly reasonable for people to want an alternative to fiat currency.”

Bill Winters, CEO of Standard Chartered

“We’re constantly in a bubble in crypto because there’s still so much to build.”

Franklin Bi, director of portfolio development at Pantera Capital

Prediction of the Week 

SEC likely to allow Bitcoin futures ETF to trade next week: Reports

Regulatory approval of a physically-backed Bitcoin exchange-traded fund (ETF) has eluded the crypto industry for years. A roundabout approach to the equation may become reality, however, with several entities seeking approval from the U.S. Securities and Exchange Commission (SEC) for a Bitcoin ETF based on futures rather than a physically-backed alternative. 

Two such ETFs, the ProShares Bitcoin Strategy ETF and the Invesco Bitcoin Strategy ETF, could see the green light from the SEC during the week of Oct. 18, according to Friday tweets from Eric Balchunas, a senior ETF analyst at Bloomberg.

“Bitcoin futures ETFs said not to face any opposition at SEC, according to multiple sources confirming this (aside, I’m hearing same thing),” Balchunas tweeted along with an article from Bloomberg. “Pretty much done deal. Expect launches next week.” Balchunas said he personally thinks approval is more than 90% likely. Early in October, Balchunas mentioned 75% odds for Bitcoin futures ETF greenlighting in October. 

The Commission, however, could also delay its decision. Cointelegraph published a separate article this week covering comments from Todd Rosenbluth, CFRA’s senior director of ETF and mutual fund research, who noted Bitcoin futures ETF approval may not arrive until 2022

Meanwhile, evidence surfaced on Friday showing the groundwork being laid for a potential SEC approval of Valkyrie’s Bitcoin futures ETF. Shares of the ETF received registration approval on the Nasdaq by the SEC. Although the SEC could decide to postpone a ruling for this particular ETF until December, the current deadline sits on Oct. 25.

FUD of the Week 

Bitmain stops shipment of Antminer crypto mining rigs into China

Top crypto mining equipment provider Bitmain closed its doors in China on Oct. 11. The firm was forced to halt operations following the Chinese government’s latest pushback against crypto and the devilish freedom it represents.

The firm said its move to halt the shipping of crypto mining rigs was part of a response to China’s carbon-neutral policies and environmental targets. However, Bitmain will continue to supply Antminer crypto mining rigs to users across the world, including those in Taiwan and Hong Kong, while the company has also upped its production capacity for its Antbox mobile mining containers.

“From October 11, 2021, Antminer will stop shipping to mainland China. For customers in mainland China who have purchased long-term products, our staff will contact them to provide alternative solutions,” Bitmain said in an announcement.

Bitcoin futures ETF will likely be delayed until 2022, says research firm CFRA

Even though Bloomberg’s Eric Balchunas noted significant possible odds for a Bitcoin futures-based ETF approval during the week of Oct. 18 (as covered above), CFRA’s Todd Rosenbluth expressed a different view earlier this week.

While he admits that a Bitcoin futures product is likely to be the first to be given the green light by the SEC, Rosenbluth asserts that the crypto sector may have to wait until next year due to the clouded regulatory environment.

The researcher also suggested that regulators could be waiting for all of these products to meet their targets so that they can be approved simultaneously to avoid a “first-mover advantage.”

Estonian regulator wants to revoke all crypto exchange licenses

On Wednesday, it was reported that Matis Mäeker, the head of the Estonian Financial Intelligence Unit (FIU), urged the Estonian government to snatch back all crypto exchange licensing in the state.

Mäeker is reportedly seeking to re-establish the regulatory landscape surrounding crypto, pushing it in a new direction. The FIU head asserted that the public is unaware of the risks inherent to the crypto industry, while pointing to the regular tropes of naughty behavior such as money laundering, terrorism financing and hacking.

He also argues that, in its current state, the Estonian crypto industry neither creates jobs for citizens nor contributes “anything significant” to the country’s tax authorities.

“These risks are very, very high. We need to react cardinally and very quickly,” he said.

Best Cointelegraph Features

US debt ceiling crisis: A catalyst for crypto’s ultimate decoupling?

Many within and beyond the crypto industry believe that the political standoff around the debt ceiling increase makes digital assets more attractive in the long run.

Crypto scoring big with European football

Introducing crypto and blockchain into football isn’t easier than scoring a back-post tap-in: “We had to educate a lot, explain how it worked and why it was interesting for them.”

The Metaverse, play-to-earn and the new economic model of gaming

The gaming industry is rapidly growing, and the emerging play-to-earn model coupled with blockchain and the Metaverse is the future.

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The crypto industry is still waiting for its ‘iPhone moment’



The crypto industry is still waiting for its ‘iPhone moment’

This year, a great crypto cycle has played out with new all-time highs, euphoria and mainstream media paying lip service to the crypto trend du jour. However, the uncomfortable truth for us in the industry is that crypto is no more present in most people’s daily lives than it was in 2017. Four years have passed — what stalled its progress?

2017 marked my first professional foray into the blockchain space when I joined Crypto.com (then known as Monaco) as its first chief marketing officer. The company grew to become one of the largest crypto service providers and fiat-to-crypto gateways in the world.

During that time, the crypto space changed. Payments are much less of a focus and many of the projects aimed at crypto adoption have been sidelined. Decentralized finance (DeFi) and nonfungible tokens (NFTs) have taken the spotlight, but they’re ultimately focused on crypto trading and unable to help the real world in any meaningful way — at least, for now.

Related: Is crypto approaching its ‘Netscape moment’?

The situation reminds me of the mobile industry before the advent of the iPhone and the revolution spearheaded by Steve Jobs. Technology and features were being stacked on top of each other but with no additional impact for the end-user, even though there was plenty of buzz.

A mobile marketing pioneer, I worked with the Mobile Marketing Association for more than ten years in Asia (served as chair during 2009–10) and saw firsthand the development of the industry. One thing that people misunderstand about that revolution is that Apple did not “invent” the smartphone to any meaningful extent.

From zero to hero with just one innovation

If you ask someone on the street what made the iPhone so successful, you’ll get at least half a dozen different answers. It was apps and the App Store, some people say. For others, it was Gorilla glass and the touchscreen. It was 3G (actually, the first iPhone did not even have it), the Wi-Fi connection, the camera, the comfortable size, the sleek design…

Of course, all of these factors contributed. But consider that, in some form, all of those features already existed in other phones. Nokia had the Symbian OS and it featured a quite rich ecosystem of apps. The same thing goes for BlackBerry, which was quite advanced for its time in terms of hardware and software — for example, in 2005, it released BBM, the proto-WhatsApp/iMessages. Palm and plenty of other companies were making “pocket computers” with stylus touchscreens. Nokia excelled with camera phones and predictive text, Motorola dazzled everyone with the Razr’s design, and so on.

The only independent innovation that the iPhone brought was the user experience (UX), and more specifically, the multi-touch capacitive screen. It introduced gestures, on-screen QWERTY keyboards, and the basic smartphone design we know today, but nothing else in the iPhone was, by itself, new. It simply was the ultimate phone — as Steve Jobs said at the time, “An iPod, a phone, and an internet communicator… not three separate devices. This is one device,” — which offered a simple to use, sleek and good-looking device, packed with features. The rest, as they say, is history.

Crypto has yet to have its iPhone moment.

Reframing crypto as the means, not the end

When we talk about crypto adoption, we need to recognize the utilitarian considerations of the average person. The vast majority think about cost and utility well before any idealistic concern. Organic food has its place, but it’s a small niche — most people buy food based on its taste and cost. Electric cars struggle because they offer a significant number of practical disadvantages and because they’re generally much more expensive.

Positioning crypto as an amazing tool for financial freedom and decentralization will ring hollow to most people. By far, the most significant reason why people get into crypto now is price gains, not its utility. Crypto is useful in certain applications, such as cheap global transfer of value. But there are many practical disadvantages to using crypto for payments, which mostly have to do with the integration with existing financial rails. The user experience of using crypto to pay for stuff has been, frankly, atrocious — with complicated fees, confirmation times and difficult units compounding the adoption struggle.

Related: Mass adoption of blockchain tech is possible, and education is the key

There are no perfect analogies but I think that the “multi-touch capacitive screen” of crypto is reframing it as a means, and not the end. The average person does not care about crypto, itself, they care about what it gives them. If you promise them Lambos and moons, they will listen but that only gets you so far.

What if you used crypto to cut out the middleman between you and your money to deliver (nearly) free transfers of money, foreign exchange, interest rates that a normal person can only hope to pay, not receive, and other benefits that would make Black Cardholders jealous?

You can bet the average person would be interested.

This is the strategy we adopted: a redeemable membership fee granting access to a suite of useful financial, travel and lifestyle services, which are easily accessible from both mobile and web apps, and even chat services like WhatsApp or Telegram. We acted in two directions: removing any friction of using our product and making it immensely useful to everyone. Just like the iPhone back in the day.

Of course, there is a long journey ahead. But if more projects in crypto operated outside of the box and focused on utility and not just crypto for speculation’s sake, it just might bring us back onto the path of mainstream adoption we embarked on in 2017.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Sean Rach is the co-founder of hi, a not-for-profit blockchain-based financial platform. Sean was the founding chief marketing officer of Crypto.com, the crypto exchange and card provider. He also served in senior roles at Prudential Corporation Asia, Ogilvy Hong Kong and Mobile Marketing Association. A Business Administration doctoral candidate at the Warwick Business School, Sean has overseen the development of several innovative digital platforms, like Safe Steps (with NatGeo and Red Cross) and Cha-Ching Money Smart Kids (with Cartoon Network), and earlier helped to launch Hallmark.com.

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Truly decentralized finance will be beyond siloed blockchains



Truly decentralized finance will be beyond siloed blockchains

“Yahoo users will not be able to interact via mail with Google email (Gmail) users,” — If tomorrow’s headlines sounded like this, the earth would come to a halt. This headline shall never see the light for all the right reasons. However, blockchain tech and its favorite son, decentralized finance (DeFi), are heading towards this rabbit hole.

Siloed blockchains with no window for external communication are dominating the nascent space. Interconnectivity is elementary and synonymous with the primitive human quality of being social. From the days of the barter system, transfer and exchange have been the two core practices on which the world has been built.

Networking among blockchains and the need for IBC

Currently, blockchain applications and the DeFi juggernaut are nothing but a balkanized group of solutions failing to realize their true potential. To resolve this concern, blockchain networks need to shake hands with other networks and be open to a sovereign network of interconnected blockchains.

The Inter-Blockchain Communication (IBC) protocol shall facilitate this shaking of hands. It lays the platform that can transfer data across different networks and facilitates the cross-chain transfer of assets and tokens. And since IBC is a blockchain agnostic protocol, it has no native network and offers an unbiased solution to the entire world of blockchain solutions.

Major blockchains, like Bitcoin and Ethereum, are siloed without a transport layer. This limits their capabilities. Imagine Bitcoin being able to power Ethereum-based smart contracts in a permissionless manner. Had this been so, users would have been able to embrace the boundless functionality of Ethereum’s smart contract alongside the world’s popular currency in Bitcoin (BTC).

Related: A multichain approach is the future of the blockchain industry

Also, Ethereum’s scalability concerns are a testament to why siloed blockchains need Inter-Blockchain Communication. By making networks interoperable, transactions can be parallelized to avoid network congestion. Using IBC, Ethereum can validate transactions quickly with fewer gas fees, attracting more people to use the network and its applications.

Moreover, blockchains seeking to be enterprise-level solutions need IBC and interoperability to cater to their clients at scale. By enabling cross-chain transactions, networks like Ethereum and Bitcoin can enjoy institutional adoption. How? To date, these networks work on the probabilistic conduct of transactions, i.e., the finality of blocks. But with IBC, chains and peg-zones can be used to guarantee finality.

With blockchain tech desirous of revamping the working of huge industries like supply chain and healthcare, IBC injects a potion of reliability into the technology and its solutions.

Prior efforts to achieve IBC were unitedly fragmented

Inter-Blockchain Communication and interoperability are not novel concepts in the blockchain world. Efforts to achieve them have been in the talks for years now and there have been multiple projects working towards connecting different blockchain networks. But the projects championing interconnectivity were themselves fragmented as their approaches, designs and use cases differed.

Related: Professional traders need a global crypto sea, not hundreds of lakes

Protocols like Cosmos with its Tendermint core, Polkadot and Chainlink have championed IBC and interoperability in their solutions. The emergence and adoption of these solutions are a giant stride towards an interoperable future.

Blockchain agnostic and omnichain is the way forward

Moving forward, exclusivity will be the biggest enemy of blockchain tech. In times of decentralization and community-first approaches, exclusive networks tread a dangerous path. Protocols must embrace IBC and provide solutions at scale.

Besides integrating IBC, two weapons with which future protocols can equip themselves are blockchain agnostic and omnichain. This would remove the element of exclusivity and open them to limitless utilities across networks. It would also improve the feasibility and reliability for institutions, corporations and maybe even governments to adopt blockchain-based solutions.

The DeFi juggernaut catalyzed the growth of blockchain and crypto space in 2021. Interoperability and IBC are the ones to look out for in the future.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Jared Moore is the director of marketing at Sifchain, the omnichain solution for decentralized exchanges. Jared has extensive experience in the crypto space, especially with exchanges.

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