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Regulatory Whiplash

It looks like the long-awaited torrent of ICO regulation is finally arriving. In the past week, sever
Richard Hendrix
Regulatory Whiplash
By Richard Hendrix • Issue #3 • View online
It looks like the long-awaited torrent of ICO regulation is finally arriving. In the past week, several governments have sent conflicting signals about their stance on this paradigm-shifting method of capital allocation. In a stunning move, China unilaterally and retroactively banned all token issuance, while Canada is sending conflicting signals. Ham-fisted approaches from regulators creates confusion and a chilling effect for entrepreneurs wanting to work in the space. Going forward, it seems highly likely that the speed and scope of regulations in the blockchain space will only increase. The only question is, how effective will they be in governing a technology that is precisely designed to not be governable?

General News
CoinDesk, a leading source of news in the blockchain space, has put out their quarterly “state of blockchain” (previously, “state of Bitcoin”) report for years. They do a good job of providing data and articulating trends; needless to say, all trends are up substantially in their latest issue. 
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Bitcoin
This is an excellent deep-dive into the history of the technology behind Bitcoin and blockchains generally. Well-worth a read for anyone wanting to understand how many constituent pieces came together to form what we call “blockchains” today. Did you know that the word “blockchain” was never mentioned once in the original Bitcoin whitepaper? 
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Segwit, the recent controversial upgrade to the Bitcoin protocol, stands for Segregated Witness. This protocol change involves removing some data from Bitcoin blocks to make transactions more efficient and versatile. It’s interesting to compare the relatively small scope of an upgrade like Segwit, which took years of persuading a highly divided community, with something like Ethereum’s planned switch to Proof of Stake, which is a much more fundamental change. 
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Ethereum
Casper, the “friendly finality gadget”, is the name for Ethereum’s particular implementation of the Proof of Stake consensus mechanism. For years this has been hailed as an absolutely critical part of Ethereum’s roadmap, and it is finally starting to be built. It’s hard to overstate the importance of Casper functioning as designed - essentially the entire future of Ethereum rests on it.
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Tokens
In a document, regulators said new projects that raise cash or other virtual currencies through cryptocurrencies will be banned. On the one hand it’s not very surprising that a totalitarian government would seek to clamp down on technology that it finds hard to control, but on the other it’s understandable that they would want to put a stop to rampant scams. Some of the best China analysis think it’s likely that Chinese regulators will follow past precent by first banning ICOs and then gradually reintroducing them in a registered, permissioned manner. Again, it remains to be seen how long bans like this are effective before anonymous (and unstoppable) token issuances become mainstream. 
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Filecoin, the project led by IPFS creator Juan Benet, has officially claimed the title for the biggest ICO to date. While I am usually skeptical of large ICO raises, this one is an exception - the team behind Filecoin is absolutely excellent, and their idea is truly revolutionary. I’m confident that this team will use these funds wisely, and will actually deliver groundbreaking technology for their investors. 
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More and more institutional investors are wanting to gain exposure to cryptographic assets, and resources are being built to allow them to do so in a compliant and well-supported manner. 
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This news is surprising. Kik, a Canadian social networking company that has raised money from the likes of Union Square Ventures, has decided to exclude Canadian residents form their “Kin” token sale citing a lack of regulatory clarity. Kik has gone to great lengths to ensure KYC/AML compliance with their token sale to date. This strikes me as overly cautious risk-aversion rather than a reaction to government threats. 
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In contrast to Kik’s decision to exclude Canadians, Impak Coin has been granted special status in Canada’s Autorite des marches financiers (AMF) regulatory sandbox. While regulators are closely monitoring Impak Coin’s actions, they are excusing the team from many onerous requirements and instead taking a wait-and-see approach to determine if these new financial vehicles pose a risk to the investing public. 
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Below the Fold
This is an interesting presentation for many reasons. Plasma is a new proposal for state-channels and nested blockchains to allow for massive scalability improvements in Ethereum. While Poon goes into great technical detail that will go over the heads of anyone but the most qualified blockchain engineers, his presentation is still worth the watch because it provides interesting insight into how this technology is architected. By watching videos like this over the years I’ve been able to build a basic foundation of technical know-how, which helps contextualize new developments as well as build rapport with engineers by speaking (a rudimentary interpretation of) their language. 
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Sharing this for no other reason than it’s a cool idea. There are over 2 billion unbanked people in the world, and many more than that who don’t have access to credit. Bloom is building a humanity-scale credit infrastructure so that everyone can access this route to financial freedom. Applications like this are exactly why it’s easy to get excited about blockchain technology. 
blog.hellobloom.io  •  Share
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Richard Hendrix

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