The Distributed Markets conference took place in Chicago on April 23, 2018, and featured an array of blockchain and financial experts working to shed light on opportunities and changes happening in the cryptocurrency space.
Among the main goals of the conference was to educate attendees on how they could integrate blockchain technology into their businesses, thereby increasing cost-effectiveness and overall efficiency. A Blockchain Academy workshop and a hackathon were also available to give developers and entrepreneurs a chance to study blockchain macro cases and showcase their skills.
In a panel moderated by Joseph Bradley, entitled “Crypto Regulation: Striking a Balance Between Compliance and Growth,” speakers Colleen Sullivan of CMT Digital; Illinois state regulator Sean T. O’Kelly; Haimera Workie, senior director of FINRA’s Office of Emerging Regulatory Issues; and Tennessee blockchain lawyer J. Gray Sasser of Frost Brown Todd addressed the topic of regulation.
Perhaps the biggest issues hitting the crypto arena are regulation, and how tokens and virtual assets should be classified. The Commodities Futures Trading Commission (CFTC), for example, has jurisdiction over commodities like bitcoin and lists bitcoin futures on regulated interest exchanges.
The Securities and Exchange Commission (SEC), however, which works to regulate securities and all derivatives of securities, is now seeking to label all tokens distributed through Initial Coin Offerings (ICOs) as such, which could subject them to strict regulatory tactics that could seriously decrease their values. The SEC has since issued several subpoenas to virtual asset enterprises to better understand how certain tokens have been issued and marketed.
Sullivan was quick to tackle this issue. “All securities have to be traded on registered securities exchanges in the United States,” she told the audience.
She explained that the SEC first weighed in on cryptocurrencies in July of 2017, when it released an investigative report on the DAO, stating that certain tokens fell under the “securities” category per specific regulations. Presently, there are over 1,500 separate virtual tokens, and none are traded through securities exchanges the way they should be, as suggested by SEC standards.
Sasser also offered his insight, suggesting that if a token is pre-sold or offered through an ICO, it should technically qualify as a security unless it meets a certain level of functionality.
One of the primary arguments among those who stand against tokens classifying as securities is that they are used as payment methods by those investing in new coins, and, therefore, qualify as “utility tokens” due to their practical nature. Thus far, the SEC has been hesitant to accept this viewpoint.
Sasser said the issue and the industry itself is clouded with uncertainty.
“I’ve been doing these panels for a long time, and usually, my first answer to a lot of these kinds of questions is ‘I don’t know,’” he joked.
For the most part, Sasser believes the SEC has been clear in stating where tokens should fall, though they’ve failed to guide distributors along the way.
Sullivan further mentioned that states follow separate rules when it comes to governing cryptocurrency activity. Illinois, for example, has long refused to recognize cryptocurrencies as valid means of money transmission, but, according to fellow speaker O’Kelly, state regulators are beginning to reverse their overall views and are now attempting to attract blockchain startups and build Illinois as a possible tech hub.
Discussing “regulatory gaps” in the crypto arena, Sullivan explained that CFTC Commissioner Brian B. Quintenz is calling for the industry to “self-regulate,” as Congress has not yet taken the reins. She said that Quintenz is asking that blockchain and cryptocurrency leaders impose a self-regulatory organization that can enforce strict standards for other industry members to follow.
Sullivan mentioned that steps toward such an association have already begun, with a recent example coming from Tyler and Cameron Winklevoss of New York’s Gemini Exchange. They have proposed a Virtual Commodities Association, an industry-sponsored, self-regulatory organization for the U.S. virtual currency industry, which will set forth practical standards regarding how an exchange should be officiated, among other goals.
Sullivan believes Congress will eventually get involved, but suggested that maneuvers like these could cover the main ground until then.
In the meantime, the blockchain is presenting several new opportunities for recording data. O’Kelly, who says the government will always be indirectly involved in the verification process of blockchain transactions, says state representatives were recently approached by an organization that wanted to track the entire life of a car on the blockchain, including the change of owners along the way. That change of title would entail government-based authorization.
Sullivan concluded the discussion by explaining that, while the crypto market lacks solid regulation, the influx of institutional capital entering the space should eventually lead to a prime broker’s presence, thus paving the way to further stability and efficiency.
“I think as the regulatory environment becomes more clear in the next 12 months, we’re going to see a lot more capital,” she explained. “Right now, most changes in the industry have applied to retail.”
Note: Distributed Markets is an event held by BTC Inc, the parent company of BTC Media and Bitcoin Magazine.
Photo credit: Allison Landy
This article originally appeared on Bitcoin Magazine.
While many people see cryptocurrency as a speculative investment, many of the new asset class’ earliest adopters believe they could be much more promising for everyday currency use.
Championing the motto “Spend Crypto, Anywhere,” the U.K.-based project, Plutus, is leading the charge in delivering a worldwide payments solution to make it easier for cryptocurrency users to spend money with merchants.
Through this payment solution, online purchases can be made using either Plutus’ Tap & Pay app or physical debit card. With Plutus, prepaid funds can be added by using the pluton token (PLU), Bitcoin, Ethereum and other cryptocurrencies.
Steering clear of “innovation for innovation's sake,” Plutus is cutting a new edge in the payments business by making emerging technology tangible and practical for the everyday user. The aim is to make transactions more seamless by offering a trusted and secure mechanism for converting crypto into fiat currency and vice versa. Consumers can spend without being subjected to massive fees while benefiting from additional incentives such as the pluton rewards.
These rewards are the signature piece for Plutus’ decentralized loyalty system. Users will get up to 3 percent in pluton as a loyalty reward for every deposit they make in Bitcoin or Ethereum. Since pluton is the preferred currency of the platform, users who transact with pluton are exempt from all fees.
“We have created both the first decentralised cryptocurrency-to-fiat loading gateway, as well as the first loyalty rewards token,” said Plutus CEO Danial Daychopan. “Unlike frequent flyer miles and similar centralized bonus programs, this means that customers have full freedom regarding what they do with the rewards they collect, as well as the confidence that their cryptocurrencies are safe on the wallets or cold storage of their choosing.”
Three Layers, One Payment Solution
The Plutus model is composed of three core solutions:
Tap & Pay is Plutus’ Android and iOS app for making purchases with Bitcoin and Ethereum at any contactless point of sale machine.
The Plutus Debit Card can be used to make payments at any physical debit card terminal worldwide, as well as online. The card can be loaded and reloaded through Plutus Tap & Pay, and it supports contactless (NFC) payments.
PlutusDEX is the company’s peer-to-peer, smart contract exchange that fosters liquidity for the Tap & Pay app. It’s here where PlutusDEX traders can escrow fiat currency such as the British pound (GBP) or the Euro (EUR) to purchase Bitcoin and Ethereum directly from Tap & Pay users.
One of the key benefits of PlutusDEX as a decentralized gateway is that user cryptocurrencies never have to be stored. This means that there is no central repository where the coins are housed as in the case of a centralized exchange. Instead of a central hot or cold wallet, the PlutusDEX order-matching engine allows customers to transact directly between each other.
In essence, Plutus never moves escrowed fiat funds to a customer’s card until that person has successfully sent a crypto transaction. This transaction is then recorded on the public blockchain and confirmed by miners. The crypto is routed directly to the buyer’s wallet of choice before the fiat is released from escrow to the card.
Company leaders said that Plutus will appeal most to freelancers, entrepreneurs, miners, traders, digital nomads, developers and tourists. As cryptocurrency continues to grow and mature, Plutus hopes to expand its audience to anyone with a smart device.
This promoted article originally appeared on Bitcoin Magazine.