Posts in Cryptocurrency
Facebook-Backed Libra Cryptocurrency Receives Regulatory Scrutiny

Libra is a forthcoming cryptocurrency offered by the Libra Association, a Swiss non-profit formed by 28 investors, including Facebook’s subsidiary Calibra, Visa, Mastercard, and Uber. Each investor pledged $10 million to the project. (Murphy & Bond, Financial Times).  Since the announcement of the coin in June, Facebook has been Libra’s principal cheerleader. (Id.)In that time, Libra has faced criticism over regulatory concerns, and even its claim of being a cryptocurrency. Libra is unlike other cryptocurrenciesin that the Libra Association will have authority over the coin. Where other cryptocurrencies have decentralized blockchain ledgers and are not issued by a central authority, the Libra Association will issue Libra and validate Libra-coin transactions. (Canellis, NextWeb).

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Blockchain Systems Create New Potential for Transparency in Conflict Mineral Tracking

The Responsible Sourcing Network’s 2018 report on commercial efforts to disclose reliable data when purchasing conflict minerals illustrated a concerning trend.(Andrea Vittorio, Bloomberg). The current trend indicates that many companies who deal in conflict minerals are receiving lower grades for their efforts and abilities to provide transparency on the origins of those minerals. Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 directs the Securities and Exchange Commission (“SEC”) to enforce reporting requirements for companies that manufacture products with conflict minerals. Conflict minerals are those that originate from mines controlled by armed groups in areas like the Democratic Republic of Congo and its neighboring countries. 

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Crypto Industry Increases Lobbying Efforts in Washington

With Blockchain technology becoming more prevalent worldwide, particularly as it relates to cryptocurrencies and initial coin offerings (“ICOs”), regulators continue their struggle to develop appropriate legislation that embodies an ideal balance between regulation and innovation. In an effort to help shape these new regulations and encourage legislation that is favorable to the crypto industry, many crypto leaders have increased their presence in Washington, primarily through lobbying efforts. (Lydia Beyoud, Bloomberg Law). In fact, lobbying efforts increased significantly during 2018 with larger crypto groups spending six-figures per quarter on lobbying alone, and crypto-specific companies filing twice as many lobbying reports in 2018 as 2017. (Id.).

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As the Cryptocurrency Industry Grows, Will the Amount of Fraud and Lawsuits Grow with It?

Cryptocurrency and the technology it relies on, blockchain, revolutionized both the tech and finance world. A blockchain is a distributed record of transactions, usually managed by a peer-to-peer network of computers that validates the transactions. With companies racing to take advantage of this new industry, it was only a matter of time before some companies would try to take advantage of unsuspecting investors. This is what happened with a company called Compcoin LLC. (“Compcoin”).

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Attack on Ethereum Classic Highlights a Vulnerability

On January 7th Coinbase paused trading on Ethereum Classic (ETC) after it fell victim to a 51% attack. The attack resulted in over $500,000 of ETC being spent twice (Olga Kharif, Bloomberg Law). To appreciate what this means for the ETC mining community, two things must be understood: Hash rates and a 51% attack.

“Hash rates” or “hash power” refers to the total computing power of a decentralized network. Proof of Work (PoW) blockchains, like Bitcoin and Ethereum, are driven by miners “hashing,” which is essentially solving complicated math problems. (Bisade Asolo, MyCryptopedia).

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Response to Jonathan Levin’s Top Three Predictions for Cryptocurrency in 2019

Last year, financial regulators around the world adapted to the rise of blockchain and cryptocurrency. Approaches to regulation have varied, but most major financial markets are striving to better understand the technology and develop methods for investor transparency and protection. In 2018, regulators such as the Securities and Exchange Commission (“SEC”) and Commodity Futures Trading Commission (“CFTC”) reacted to the cryptocurrency marketplace with heightened attention. (Jonathan Levin, Bloomberg). Last year, for example, the SEC started to examine smaller brokerage firms dealing virtual tokens for potential enforcement actions. Outside the United States, French regulator Autorite des Marches Financiers (“AMF”) blacklisted new cryptocurrency investment websites, while Russia drafted legislation to implement cryptocurrency regulation.

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