Welcome to Chain Letter! Great to have you. Here’s what’s new in the world of blockchains and cryptocurrencies. | | Japan just gave its cryptocurrency industry legal power to police itself. The cryptocurrency scene is evolving too quickly for policymakers to keep up. That’s the rationale behind a move by Japan—already arguably the most advanced nation in the world when it comes to cryptocurrency regulation—to officially let industry create and enforce its own rules. If the approach works, expect other nations to do try it too.
Japan’s Financial Services Agency has granted the Japan Virtual Currency Exchange Association, a self-regulatory organization made up of representatives from cryptocurrency exchanges, authority to create rules aimed at protecting consumers, preventing money laundering, and standardizing how exchanges should operate. The agency also gets the power to sanction exchanges for breaking those rules, reports Reuters.
In April of 2017, Japan’s licensing regime for exchanges—the first of its kind—went into effect, part of the government’s reaction to the catastrophic collapse Mt. Gox, a popular cryptocurrency exchange that lost after $450 million to hackers in 2014. Despite the move, in January of this year another exchange, Coincheck, got hit, this time for more than $500 million.
Coincheck was operating without a license, under an exemption. But the hack revealed gaps in the policy, particularly with respect to cybersecurity, and illustrated how difficult it is for lawmakers to keep tabs on the fast-changing industry. That’s not just a problem in Japan. Brian Quintenz, a commissioner for the US Commodity Futures Trading Commission, has suggested that American cryptocurrency exchanges ought to think about self-regulating as well. Cameron and Tyler Winklevoss are working with other exchange owners to heed that suggestion. | | A cryptocurrency called Decred is gaining cred. Launched by former Bitcoin developers in 2015, Decred’s time as an under-the-radar crypto-token may be at an end. Earlier this week, its price spiked after the token, whose market cap is around $400 million, was listed on the popular exchange Binance. But the more significant development came a few days earlier, when the coin’s developers launched a unique feature designed to support the network’s decision-making—and in the process gave Decred holders the power to choose how money in the project’s “development fund” is spent. The money comes from the 10 percent cut it takes from the system’s mining rewards. With the new system, users will be able to propose and vote on ways to spend it (check out the early proposals here). Called “Politeia,” the system stores the voting data and uses cryptography to anchor people’s votes to the Decred blockchain. People who hold more tokens will have more voting influence. It seems like an innovative approach to blockchain governance, which many crypto projects are struggling with. We’ll see if it actually works. | | Loose Change Fill your pockets with these newsy tidbits. | | | The UK government has canceled a plan by the Royal Mint to a launch gold-backed crypto-token. (Reuters) | | | | Algorand, a new proof-of-stake blockchain protocol created by renowned MIT cryptographer Silvio Micali, has raised $62 million in new funding. (CoinDesk)
+How to fix one of Bitcoin’s biggest problems (TR) | | | | Coinbase has obtained a license in New York to operate as a “qualified custodian,” a key certification needed to attract more investment from institutional investors. (Coinbase) It’s also added Circle’s new dollar-pegged crypto-token (Coinbase, again), and formed a consortium with Circle to establish standards for “fiat on the internet.” (Circle) | | | | IDEX, a self-proclaimed decentralized crypto exchange, apparently is not. It’s going to start blocking orders from users located in New York. (The Block) | | | | An Indonesian company plans to launch a Sharia-compliant blockchain-based bond in the coming months. (CoinDesk) | | | The Money Quote “It has not been what you would call a roaring success.” —Craig Pirrong, a professor of finance at the University of Houston, on Bitcoin futures markets thus far. (Bloomberg) | | | |
