Insiders, rumors and Bitcoin
Wrote : Vladyslav Antonov
March 20, 2018
What does Wall Street think of Bitcoin?
What will happen to utility tokens?
And why Puerto Rico is so important?
Announcement of the best ICO during the lunch break. I am in the corner :)
As I promised last week, I went to blockchain summit in Austin, Texas with the goal to get some insides of cryptocurrency market. I was able to speak with various investors, lawyers, CEO’s, co-founders and even some cryptocurrency “whales”. I got a lot of interesting information which I am willing to share with you in this special report!
What does Wall Street think of Bitcoin?
Jenny Q. Ta helped to answer this question. She was the Founder and CEO of Titan Securities(investment firm) and founder of Vantage Investments, a full-service broker-dealer company. She came directly from Wall Street and she shared some information regarding her vision of cryptocurrency market.
Jenny Q. Ta
Per her words, she and some other investment companies that are directly tied to Wall Street have liquidated their positions in major Dow Jones companies and real estate this winter. What about cryptocurrency? Well, they also liquidated their position in Bitcoin when it peaked in December. Majority of these investors are bullish on cryptocurrency, however they expect Bitcoin to dip as low as $5,000. At this point Jenny is planning to re-enter the market again because she thinks that $20,000 is not a limit for Bitcoin.
Jenny also warned about “economists” and other “analysts” who work for Wall Street. Every dollar that goes to crypto is a dollar that Wall Street loses. There is no surprise that Wall Street has hostile attitude towards cryptocurrency market. Why would you support competitor that takes hearts and pockets of your potential clients?
She told that major Wallstreet companies were very skeptical towards Bitcoin and cryptocurrency at first, but rapidly changed their attitude its price soared in mid-2017. Since then, they actively research crytocurrency market even though they do not want admit that publicly;
Puerto Rico. New cryptoland?
You might wonder, why did I decide to talk about Puerto Rico so suddenly? The reason is quite simple: according to various sources, several largest international corporations are working on blockchain projects in Puerto Rico. And there is no surprise in that: it is a U.S. territory which offers tax benefits to businesses. Unfortunately I wasn't able to get the names of these companies but it's clear that we are talking about top tier corporations with annual multi-billion revenue. It's a great bullish sign for the market as it indicates healthy curiosity from traditional market giants.
As a side note - Puerto Rico's Department of Economic Development and Commerce is aiming to help blockchain businesses by establishing special advisory council for blockchain. Based on this information it’s safe to assume that in the nearest years we will see surge of large blockchain projects managed by leading financial funds and corporations.
Token dilemma: Utility or Security?
Utility or Security?
The third point is directly related to ICO market. Currently, we see hundreds of emerging ICO’s with tokens marketed as “Utility”. I had an opportunity to speak with a person who has direct contact with SEC. He told me that SEC has quite simple approach -every single token which was generated during ICO should be treated as security.
This is an example which is used: “For example, you participate in ICO that offers utility tokens. You can use utility tokens in the future to get premium subscription/account. However, if you acquired tokens enough to buy, let’s say 100 years of subscription, it’s very likely that you are expecting returns from it”. And it’s hard to argue with this logic. It’s crucial to know that “utility token” doesn’t really guarantee you legal compliance. If you have a cat, and you will call it horse, you will still have a cat. Same goes with "Utility tokens" which are still securities.
Legalization of exchanges and securitisation of tokens.
Currently all security tokens are barred from centralized exchanges (like Binance, Bittrex, Poloniex, Bitfinex etc). This creates an interesting paradox: we have the whole bunch of utility tokens that don’t represent any value, but at the same time it is hard and not exactly legal to create your own security token through public ICO.
I discussed this problem with several venture and angel investors who informed me that this problem is going to be fixed in the nearest time. How? In the US, there are several large groups of cryptoinvestors who lobby the interests of cryptocurrency on legislative level. The process is going to start with three major security tokens, backed by: gold, oil and real-estate. Perhaps even in 2018 we will see first, completely legal security tokens that will comply with all international and US laws. But before that will happen, some US laws are going to be changed.
What are the consequences? Very likely that as a result, utility tokens will fade away once “security tokens” will become legally adopted. Unlike in 2017, this time majority of investors will target tokens backed by real-life assets such as real estate. Even though it might sound like a good thing, I want to remind that asset-backed tokens have very low volatility in compare with the rest of cryptocurrency.
Future of Monero and Zcash
Monero/Zcash/Dash might face serious troubles soon. Unfortunately, regulations mean compliance with existing “Know Your Customer” and “Anti-Money Laundering” laws. Integration of cryptocurrency exchanges into existing financial system will force exchanges to delist tokens that theoretically violate AML and provide full anonymity to their users. In other words: if token allows anonymous transactions, then it can be used for bribery, corruption, terrorism, economic sanctions dodge etc. National banks and international watchdogs are quite solid about it: no anonymous transactions. Good example is Coincheck that temporary suspended all Monero transactions after the hack.
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