Seven UK Companies Form Cryptocurrency Trade Body
Seven major crypto companies operating in the UK have announced the formation an independent cryptocurrency trade body. The group, Crypto UK, has stated that its principal aim is to “improve industry standards and engage policymakers.”
Also Read: Independent Ratings Agency Alerts Investors About Dangers of Tether
Leading Cryptocurrency Companies form Crypto UK Trade Body
The members of Crypto UK are Coinbase, Etoro, Cex.io, Blockex, Commerceblock, Coinshares, and Cryptocompare – comprising trading platforms, exchanges, asset managers, merchants, comparison websites, and intermediaries from the cryptocurrency sector.
“Regulation is Imminent”
The CEO of Coinbase UK, Zeeshan Feroz, stated that the “fundamental” goal of Crypto UK is to “engag[e] as a single industry with the government,” adding that “Regulation is imminent and that’s a good thing.”
Crypto UK has issued a code of conduct outlining the principles by which its members are expected to adhere. The code of conduct emphasizes the need for members to operate with transparency and in full adherence to UK regulatory requirements, in addition to making practical propositions with regards to the management of customer funds.
Cryptocurrency Sector “Severely Misunderstood” by Regulators
Mr. Gandham described the cryptocurrency industry as being “severely misunderstood” by mainstream institutions. “That’s why Crypto UK has been established,” Mr. Dandham said, “to promote best practice and to work with government and regulators to ensure that the UK benefits from the exciting potential of this international technology.”
What is your response to the formation of Crypto UK? Share your thoughts in the comments section below!
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Token Holders Don’t Give a Damn About Voting Rights and Community Governance
You’ve probably heard of The DAO and you’ve certainly heard of the ICO. Now say hello to the DAICO, an “innovative fundraising model” that aims to combine the best of both frameworks. The Abyss Platform is the first project to utilize this hybrid organizational structure, which has been credited as the brainchild of Vitalik Buterin. There’s just one problem with The DAO, the ICO and the mutant DAICO it’s spawned – the public couldn’t give a damn about key tenets such as voting rights and community governance. All they want is cheap tokens they can flip for a quick profit.
Also read: U.S. Corporate Customers Barred From Bitfinex’s Margin Markets
Live and Let DAICO
The DAO (decentralized autonomous organization) was the first major project to be launched on the Ethereum blockchain, complete with a novel governance structure that replaced a board of directors with a community-run model. It didn’t end well. A vulnerability in the code saw one third of the ether committed to the project stolen and The DAO collapsed. As prominent crypto critic and all-round mischief-maker Preston Byrne explains:
The original DAO could pass resolutions with a simple majority drawn from quorum of 20% (meaning as little as 10% +1 of the investors could bind the remaining 90%). No resolution ever passed because none of the tokenholders actually cared enough about what the DAO was doing in order to participate. Their primary motivation was to sit on their hands and wait for their investment to pay off.
Byrne may be a perennial bitcoin bear, but as a practising English solicitor, he knows more than most when it comes to the sort of legal matters that DAOs and DAICOs were meant to solve. Take a look at many of this year’s ICOs and you’ll find, somewhere in their roadmap, talk of token holders being empowered to vote on key protocol changes including platform developments and new features. It all sounds very progressive and democratic, but the trouble is even the loyalest of community members don’t care enough to want to micromanage decisions using the power invested in them by tokens. The real reason why ICOs are so eager to assign voting rights to their investors is to add legitimacy to their claim that the token is a utility and not a security.
Good Intentions Lost in the Abyss
The Abyss “merges some of the benefits of Decentralized Autonomous Organizations (DAOs), aimed at upgrading and making the initial ICO concept more transparent and secure”. It allows “token holders to control the fund withdrawal limit, also providing an option to vote for refund of the remaining contributed money in case the team fails to implement the project, with Oracles (appointed industry leaders) acting as arbitrators.” The idea is plucked from a concept Vitalik Buterin mooted a few weeks back.
In his scathing critique of the DAICO, Preston Byrne writes: “I feel like I’m taking crazy pills here, because the SEC literally wrote a report about the original DAO scheme, likened it to a security, and cited as authority for this proposition not one but TWO cases relating to an infamous 1970s pyramid scheme that landed its promoter in federal prison for nearly a decade.”
He finishes: “A DAICO is nothing more than a new acronym for the same old bad ideas. The broken DAO concept, in particular, requires extensive rethinking and movement onto private/permissioned blockchains in order to shed its pyramid scheme-like qualities and serve a useful function. On account of which I am completely amazed that anyone would want to combine the DAO and ICO concepts under any circumstances.”
Original thinking deserves a chance to flourish, and blockchain governance – for all its pitfalls – may yet find a way to work. It probably won’t arrive in the form of the DAICO though or any of the other “revolutionary” governance models being used to float the current crop of crowdsales. Good ideas will ultimately prevail, while the ones deemed too wacky and unworkable will return to the abyss that spawned them.
Do you think blockchain democracy and token-based voting is a viable concept, or is it destined to fail? Let us know in the comments section below.
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Hong Kong Crypto Traders Turn to U.S. Futures Markets
An increasing number of Hong Kong-based cryptocurrency traders are reportedly turning to U.S.-based bitcoin futures. The shift away from domestic markets has been spurred by a perception that the American futures markets receive greater regulatory oversight than Hong Kong’s unregulated cryptocurrency exchanges.
Also Read: Bank of Thailand Bans Banks From Cryptocurrency Activities
Demand for Exposure to U.S. Bitcoin Futures Markets Surges Among Hong Kong Traders
Mr. Cheung described the types of cryptocurrency typical traders seeking to access bitcoin futures markets, stating “There are two types of Hong Kong investors who like to trade US bitcoin futures. There are bitcoin miners and other investors who trade bitcoin and want to use the futures products to hedge. The others are normal futures investors who purely want to take profit created by speculative futures trading.”
Gary Leung, the chief executive officer of TD Ameritrade, also attested to the high demand for exposure to U.S-based bitcoin futures markets among Hong Kong-based customers, stating “We have received a lot of inquiries about bitcoin futures since we started operating in Hong Kong last October when the prices were surging.”
Lack of Regulatory Oversight Deters Investors From Local Exchanges
Benny Mau of China Securities International Finance Holdings outlined the concerns held by many Hong Kong-based traders, stating “Bitcoin and other digital currencies are basically not regulated in Hong Kong because they are traded like commodities. If the digital currency platforms have a problem or are hacked, the investors may suffer losses because the regulators might not do anything for them. This has discouraged many Hong Kong investors from trading digital currencies in Hong Kong.”
“Instead, they’re trading them on the US exchanges, which are regulated. The futures prices may go up and down substantially but investors do not need to think about the counterparty risk or worry about the platforms having a problem. This is why bitcoin futures in the US are more attractive to Hong Kong investors, Mr. Mau added.”
Shifting Market Conditions
“When bitcoin futures were launched last December, the bitcoin price was rising and everyone was optimistic. Now the price has tumbled and speculators may be finding it harder to make money. In addition, many governments are increasing regulation of bitcoin and other digital currencies. This has raised questions about the outlook for the futures products,” Jasper Lo Cho-yan said.
What is your response to the increasing demand for regulated bitcoin futures products among Hong Kong traders? Share your thoughts in the comments section below!
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