Friday, May 1, 2015
‘I Don't Like That an Organization I'm Affiliated With Has Mark Karpeles Listed On Page One.’ An Interview with the Bitcoin Foundation’s Bruce Fenton
Circle Building Its Global Vision Thanks to $50M Investment from Goldman Sachs and Others
Why Namecoin Didn't Take Off: A Cautionary Tale
Tsinghua University and Bitcoin Company Huobi Launch Digital Assets Research Initiative
Tsinghua University PBC School of Finance and Bitcoin exchange Huobi have launched a joint Digital Assets Research Initiative. With this initiative, Tsinghua University joins MIT and technology giants IBM and Samsung as one of the world’s major institutions conducting research and development of blockchain technology, decentralized systems and digital assets.
Founded in 1911, Tsinghua University is one of the nine elite Chinese universities, and it is considered the top institution of higher learning in mainland China alongside Peking University. It describes itself as being dedicated to academic excellence, the wellbeing of Chinese society and global development. Often described as “the MIT of China,” Tsinghua was regarded as the top Chinese university by the 2015 Times Higher Education World Reputation Rankings, where it was ranked 26th globally.
The PBC School of Finance at Tsinghua University was founded in 2012, as a joint venture between the University and the People’s Bank of China (PBC), with the mission of promoting excellence in the finance industry and financial regulation through top-notch education and cutting-edge research. In partnership with the central bank and national financial regulators, the PBC School of Finance established the National Institute of Financial Research (NIFR), with the mission of doing top-class research on financial reform and development, and providing policy analysis and advice for financial policymakers and regulators.
Huobi is China’s leading Bitcoin company. With financial backing from Silicon Valley investment firm Sequoia Capital, Huobi operates a Bitcoin exchange and provides services to individual and institutional clients. With a 16.34 market share, the Huobi Bitcoin exchange is one of the most active in the world.
PBC School of Finance Dean Liao Li, PBC School of Finance Vice President and Deputy Party Secretary Zhao Cen, Huobi founder and CEO Li Lin, and other leaders attended the Digital Assets Research Initiative launch event. Li Lin and Liao Li each gave a speech, and Vice President Zhao Cen signed an agreement formalizing the university’s long-term cooperation with Huobi.
The work of the Digital Assets Research Initiative will be jointly conducted by finance and technology experts from Tsinghua University PBC School of Finance and Huobi. It will be hosted at the Tsinghua PBC School’s Internet Finance Research Lab and Huobi will be the official sponsor of the program.
There are evident parallels between Tsinghua University’s Digital Assets Research Initiative and the MIT Digital Currency Initiative, recently launched by the MIT Media Lab to address some of the most critical challenges to creating a safe, stable and secure digital currency and directed by former White House senior adviser for mobile and data innovation Brian Forde. In both cases, a prestigious university with strong ties with the nation’s technical, financial and political establishments takes the lead in the digital currency space, with funding coming partly from the private sector.
It’s important to note that, as revealed by Goldman Sachs’ recent report about the future of money, 80 percent of bitcoin volume is exchanged into and out of Chinese yuan. Therefore, the Digital Assets Research Initiative could influence the positions of the Chinese government on bitcoin and digital currencies.
“Contrary to commonly held belief, the regulatory environment for operating a Bitcoin business in China is actually more accommodating than the United States,” said Huobi product manager Robert Kuhne in a recent interview on CoinReport. “It can’t be said with absolute certainty what the Chinese government policy will be in the future. It is likely that the government will not do anything until Bitcoin grows significantly. Today, Bitcoin’s total global value is a $4 billion U.S. dollars. This does not appear on the radar of Beijing bureaucrats who are responsible for managing the world’s second-largest economy.”
Boost VC-backed Bitcoin Smart Contract Startup Hedgy Raises $1.2 million
The Boost VC Tribe 4 graduate Hedgy completed a $1.2 million funding round from investors including Tim Draper, Salesforce CEO Marc Benioff and Sand Hill Ventures.
Hedgy, founded in April 2014 is the first Bitcoin startup to create multisig powered smart contracts to protect merchants from the price volatility of bitcoin.
Initially, under the project name Coindash, Matt Slater (co-founder and head of trading) and Juan Pineda (co-founder and head of technology) worked together in Boost VC’s bitcoin hackathon to create prototypes of the world’s first programmable smart contracts for derivatives.
Using a derivative called “over the counter non-deliverable forward contract,” Hedgy allows two parties to agree on a price of bitcoin that will be traded at in the future.
“All it means is that instead of exchanging bitcoin at the end you just exchange the price difference,” Slater explained. Essentially, the agreement would lock the price of bitcoin, say $500 / BTC, for a certain amount of time. This way, merchants or miners will be free from the volatility of bitcoin.
In correlation to the recent funding round, Hedgy launched a product similar to the concept of the original merchant-targeted smart contracts, this time for miners.
Miners using the newly launched derivative can initiate smart contracts to agree upon a future price of bitcoin which they wish to sell after a certain amount of time that will be settled on the bitcoin blockchain.
The new product of Hedgy is mentored by the founder of MegaBigPower Dave Carlson, who has been working with Hedgy to develop the derivative. The U.S.-based bitcoin mining company MegaBigPower is also the first bitcoin mine to use the derivative. The bitcoin mined from MegaBigPower is purchased by London-based Bitcoin derivatives exchange Crypto Facilities.
How Hedgy Works
A bitcoin miner will first “hedge” bitcoins at a price of perhaps $250/BTC for 30 days. Then an indicator of Interest is sent to the Hedgy Chat. To initiate in a smart contract, a pre-contract negotiation is made directly with counterparties. Once the terms are agreed upon by the counterparties, the contract is submitted to the Hedge Oracle to create and settle the smart contract.
After the smart contract has been created, a multisig address is generated where the miner and counterparties each deposit at least 30 percent of the BTC to the designated multisig address. As soon as the deposits are confirmed, it goes live on the blockchain, completing the deal.
Hedgy explains that this could help miners deal with increasing electricity costs, hardware obsolescence and fluctuating prices, which are a major problem facing bitcoin mining profitability.
As a decentralized brokerage for miners and counterparties, Hedgy could provide miners an effective method of dealing with bitcoin volatility in the future.
Bitex.la Opens Bitcoin Branches’ in Argentina and Chile
Through a partnership with Uruguay-based remittance company, More Money Transfers (MMT), Latin American Bitcoin exchange Bitex.la has 19 agents in Argentina and one in Chile who will now sell bitcoin.
Providing services for the non- or underbanked in emerging markets has been regarded as a powerful use case for bitcoin, especially in Argentina. The country’s high inflation and strict economic controls have led many to believe bitcoin as currency and a payment network could succeed there.
According to a company spokesman, Bitex.la had that in mind when they were planning the branches. The exchange currently allows people in numerous Latin American countries to buy bitcoin, but that requires a bank account. The new retail stores allow Argentina’s and Chile’s unbanked population to buy bitcoin with cash.
Offline Then Online
Bitex.la says it has signed an exclusive agreement to use More Money Transfers’ large agent network in Latin America. More Money Transfers has agents in more than 13 Latin America countries and partners around the world.
Customers interested in buying bitcoin will first need to create a Bitex.la account online and go through the know-your-customer process. Once the account is activated, he or she can then go to one of the More Money Transfers branches with a valid ID and pesos. Fifteen minutes later, U.S. dollars will be credited to the user’s account and then he or she will be able to buy bitcoin online.
Currently there are More Money Transfers offices in Chile’s capital, Santiago, and in numerous Argentinian cities, including 12 in the nation’s capital, Buenos Aires. Bitex.la told Bitcoin Magazine they will expand to all of Latin America and that the service will be expanded to Uruguay, Peru and Brazil in the coming weeks.
Bitex.la said More Money Transfers is very supportive of Bitcoin, citing the company’s exclusive deal and further expansion as proof. More Money Transfers says it looks at digital currency as “near-future remittance technology.”
Latin American Powerhouse
Bitex.la was founded in 2014 and quickly became a leader in Latin America’s digital currency industry. The company operates an online bitcoin exchange that is available in nearly every South American exchange and has partnered with AstroPay, one of the largest payments services in the region.
In May of last year, the exchange launched with a $2 million investment from an undisclosed U.K. firm. Later that year, the company bought regional digital currency exchange Conectabitcoin. The company has continued to run and grow the exchange as it seeks to bring bitcoin to Latin America.
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Thursday, April 30, 2015
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Chamber of Digital Commerce Hosts AML Compliance Boot Camp in New York Today
The Chamber of Digital Commerce will hold a two-day anti-money laundering (AML) compliance boot camp for bankers, regulators and digital currency companies. The event will be in New York City from April 30 to May 1, with an optional workshop on May 2.
The topic of compliance and regulations is a tough one for Bitcoin companies. AML Know-Your-Customer and OFAC regulations are difficult for large and established companies, as seen recently when PayPal was fined $7 million by the U.S. Treasury Department for processing illegal transactions from blacklisted persons.
According to the president of the Chamber of Digital Commerce, Perianne Boring, AML can be one of the most complex and difficult laws to be compliant with. And for a startup with little capital, a small staff, and little knowledge of the regulations it can be extremely difficult. When you add the nascent state of digital currency regulations on top of that, it can seem overwhelming.
The United States has been particularly difficult when it comes to regulations. The infamous New York BitLicense proposal, which is a proposed special license for digital currency companies in New York State, is set to be finalized “soon,” but an exact date has not been given. Analysts anticipate that the regulation could set a standard for Bitcoin regulations across the United States and possibly in other countries.
Connecting Digital Currency Companies, Bankers and Regulators
The boot camp is one of the few opportunities to learn about proper AML compliance for Bitcoin companies. It also is an opportunity for Bitcoin companies to meet with bankers and regulators, groups usually outside of the networks of most most companies in the Bitcoin community.
According to Carol Van Cleef, a partner at Manatt, Phelps & Phillips and the creator of the boot camp, the event is designed to bring together the various groups.
“A truly effective AML program cannot be developed in a bubble,” Van Cleef said. “And we know that one the biggest benefit for companies attending these programs is meeting the regulators, bankers and law enforcement also attending.”
“There aren’t many opportunities for these parties to get together and meet each other in a collaborative environment. Connecting in small working groups at boot camp helps both sides gain a better understanding of what the other has on their plate.”
Van Cleef knows what she is talking about when it comes to regulatory boot camps. She started the first AML compliance boot camp in 2005 to help the traditional banking industry comply with the Bank Secrecy Act and additional regulatory requirements emerging from the USA Patriot Act passed after 9/11.
According to Van Cleef, many banks and financial institutions were struggling at the time to understand what these laws and regulations required them to do. Banks were increasingly concerned as they watched more and more enforcement actions and civil money penalties being imposed for lax compliance. Van Cleef sees a very similar phenomenon happening within the digital currency industry which is why she thinks this boot camp is critically important for the young industry.
“New regulatory requirements can seem overwhelming and even somewhat distant, leaving many companies in the affected industries not interested in compliance. The bootcamp is not just a way to learn how to be compliant but also meet the people who work with the regulations every day.”
Regulatory Crash Course
The event is ideal not only for bitcoin startups just starting to build their AML programs but also for companies with established programs to both benchmark their efforts against others and fine tune their process. During the two day course, Van Cleef and the other course instructor, Maureen Sanders Piccillo, who is a former US Internal Revenue Service’s National AML Program Manager (the unit that examines digital currency companies for compliance with the BSA), will work with exercises that teach participants the necessities of an AML program.
There will also be an optional third day, which will be an AML program drafting workshop. According to Van Cleef, participants learn so much in the first days that they are unsure where to start, but the workshop gives attendees a clear game plan to follow.
Participants in the class will also be able to receive educational credits for attending. The credits will be issued by two of the sponsors for the event, the Digital Currency Council and Association of Certified Anti-Money Laundering Specialists.
Other sponsors of the event include Manatt, Phelps & Phillips, Tally Capital, MelonDrexel, compliance solution provider IdentityMind Global, the Anti-money Laundering Training Institute and Comptegrity.
The New York City boot camp is just one of the several educational initiatives the Chamber of Digital Commerce produces. Most recently, the organization sponsored the boot camp at the North American Bitcoin Conference, a large annual event for bitcoin enthusiasts and professionals. The boot camps are part of the industry group’s larger goal to educate government officials, financial professionals and bitcoin startups alike.
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