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Wyoming Looks Determined to Legalize Bitcoin as Money

Wyoming is introducing a bill that will put cryptocurrency like Bitcoin on the same legal footing as money. The bill will also provide a precise classification of digital assets, especially for custody administration.


Cryptocurrency to Have the Same Legal Status as Money

Sponsored by Sen. Tara Nethercott (R-WY) along with five other state Senators and Representatives, the proposed bill titled “Digital assets-existing law,” calls for the proper classification of virtual assets. The bill also seeks to create a legal framework for virtual asset custody via banks instead of other financial institutions.

According to the bill, virtual assets fall under three categories: securities, assets, and currency. The bill sponsors believe that cryptocurrencies like bitcoin fall under the currency category giving them the same legal status as money.

With Bitcoin classified as money, BTC transactions can become interest-free according to Article 9 of the Uniform Commercial Code (UCC). This classification also extends property rights to cryptocurrency owners removing the need for intermediaries in peer-to-peer transactions.

Wyoming

Concerning Cryptocurrency Custody

Concerning custody, the bill seeks to create a framework for banks to act as qualified custodians of digital assets. Based on this framework, banks will offer digital asset custodial services akin to the type provided to mainstream securities.

Thus, banks offering such services will do so according to the SEC’s Custody of Funds or Securities by Investment Advisers. This means that such banks can offer cryptocurrency custodial services nationwide, which will be a step towards solving one of the nagging issues in the digital asset industry.

Speaking to Forbes about the benefits of the bill, Sen. Nethercott said:

The time is now to provide the pathway for blockchain and cryptocurrencies, and Wyoming has the nimbleness and responsiveness to the needs of these industries to respond accordingly to the growing and adapting landscapes of cryptocurrency.

Blockchain-Related Legislation in Wyoming

Apart from the Digital assets-existing law bill, the Wyoming State Legislature is also considering other blockchain-related pieces of legislation. Rep. Jared Olsen (R-WY) and Sen. Chris Rothfuss (D-WY) along with a group of other lawmakers recently introduced the “Corporate stock-certificate tokens” bill. If passed, it will allow companies to issue blockchain-based share certificates.

Back in December 2018, Wyoming reinforced its reputation as a blockchain-friendly when it passed the blockchain bank bill. Companies like Cardano have even announced plans to move to the state.

Do you think cryptocurrencies should have the same legal status as money? Let us know your thoughts in the comments below.


Image courtesy of Shutterstock

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CoinDesk’s Crypto-Economic Data Is Now Accessible on GitHub

Nolan Bauerle is research director at CoinDesk.

For more data and insights, visit the CoinDesk Crypto-Economics Explorer


Starting today, CoinDesk will use GitHub to help crowdsource potential methodology changes and data sources for our Crypto-Economics Explorer (CEX), our comprehensive data tool designed to measure and compare crypto assets. 

After we launched the beta version of our tool in November, the clearest critical comment we heard was related to our methodology for calculating developer interest in a blockchain. More precisely, we heard feedback on the decision to only count activity on one GitHub code repository toward each blockchain’s “developer score.” 

The critique was that the methodology behind the CEX was insufficient to measure developer interest across each project.

As an example, bitcoin’s reference implementation is Bitcoin Core (which is the repository the CEX tracks). While that works fine for bitcoin, ethereum is implemented through several clients, which includes the largest repository (Geth, which we track), but also the independently developed, interoperable, but equally important Parity client (whose repository is not currently tracked in the CEX), as well as clients such as cpp-ethereum and still others.

By counting bitcoin’s single client, critics said the CEX painted a more accurate picture of developer interest in bitcoin, but by counting only one client for ethereum, the explorer missed out on some of the developer interest on that blockchain.

Our logic for the conservative approach was that we wanted to get the beta version of our tool off the ground with a lowest common denominator — developer interest in core protocols as implemented in their principal client. Comparisons of highly heterogeneous blockchains is a challenge and we wanted to have a solid foundation before we expanded data points and methodology any further.

The plan from there was, and is, to grow the list of code repositories we track. Our ambition is to soon track GitHub activity beyond the core protocol and client implementations all the way to associated projects built off of that blockchain, including wallets, dapps and layer-two solutions like state channels and sidechains.

After we launched and heard the criticisms, we set out to implement our full vision and expand the repos and activity on GitHub we tracked. When we started, however, we quickly realized the complexity of this task. What we wanted to do meant tracking thousands of projects and repositories. What we needed was a solution that could scale to the complexity and size of the industry and that could capture developer interest and activity in a blockchain from “head to toe.”

Our solution is now to go directly to developer communities, enabling the coders powering various blockchains to provide their input on our methodology in a setting that’s most apt given their work. 

That is, Coindesk Data has now published the methodology and data sources for the CEX’s developer interest in GitHub itself.

There are several master files in our new repository to get the effort launched: one for the repos we currently track, another for the weights we give each data point, and finally another for the methodology of how to integrate associated projects in the future.

The goal is to use GitHub’s workflow tools to help us scale this important metric. Now, anyone can make a pull request for CoinDesk Data to follow a repository, to change weights given to a certain data point or to help inform any larger methodology change.

The hope is that this forum will help us harden the methodology, spark debate and scale our coverage to every corner of GitHub related to our industry. We look forward to your continued feedback.

Image via CoinDesk CEX

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How BlockEx Went from $24 Million ICO to Layoffs in Less Than a Year

BlockEx’s treasury couldn’t stop taking hits in 2018 – and for the London-based startup, it has meant significant delays, scaled-back ambitions and layoffs.

CEO Adam Leonard confirmed to CoinDesk that “staff reductions” had taken place.

“Some of it naturally as products finished and additionally to reduce burn,” Leonard said via email, declining to offer specifics on how many were let go. “We are not winding down the business and hope to have some good news next week.”

According to a year-end review penned by Leonard earlier this month, the company is working to finalize a new round of fundraising. So, how did BlockEx go from a reported $24 million ICO and equity raise to layoffs in roughly 12 months?

Fund management

BlockEx’s treasury took a number of hits with cascading effects through 2018.

BlockEx first got attention as a platform for issuing tokens, but the company had aimed to offer a place to trade the tokens it issued as well, plus ways for existing trading shops to easily get into crypto trading. The company believed it could have been first to market with a securities token issuer that had the blessing of a European Union regulator, that is if it hadn’t had various troubles with investor funds.

“We would have been up by now,” Leonard explained to CoinDesk in a phone call.

He wrote in the annual review about some of the company’s issues in 2018, calling it “a rollercoaster of a year,” but he expanded on those observations in interview. “You could say it’s setting back the security token industry in Europe,” Leonard said.

BlockEx ran its own token sale last year for the DAXT token, the chief utility of which was giving holders early access to tokens issued by BlockEx. The trouble, the company now believes, was that it insisted on strict adherence to KYC/AML practices. Prices on ETH dropped dramatically from the start of its sale at the end of December 2017 until it closed in early March 2018.

Further, the company chose not to finalize any sale until a buyer had received DAXT in exchange for their ETH. So, if the buyer saw ETH plummeting and wanted out of the position, they would let them go.

Still, many stayed in, but by the time BlockEx got its hands on funds after all the KYC/AML checks, it had lost considerable value.

Leonard wrote in his update: “So, in reality, out of the £20 million raise, we were actually left with just £5.5 million of available funds for the business go-forward basis.”

Nevertheless, as Leonard pointed out, “£5.5 million is a lot of money if the market had been marginally successful.”

The cascading effects set in from here. With ICOs freezing up, there weren’t new offerings on the platform to make. This cut into revenue and the value of the DAXT token. “Most of the ICOs we contracted with killed their ICO or pushed it back into 2019,” he said.

On top of all this, BlockEx had expected an $8 million investment from one fund set up by a blockchain advisory that never came through. It had planned to buy both a large share of tokens and some equity in BlockEx. The fund never succeeded in closing, so it never delivered its promised investment.

Project graveyard

Due to these setbacks, BlockEx ended up not coming through on a number of initiatives for 2018.

Among its unfinished projects: its mobile app, functionality by which DAXT could be staked on the BlockEx exchange for discounted trading, supporting third-party market makers and additional quick-buy features.

BlockEx saw setbacks in its ability to quickly set up white-label brokerage services for equity shops. It also has had to delay an overall audit feature for the BlockEx exchange.

“The plan for BlockEx always was for different auditing firms to run regular audits,” Leonard said, so users and traders would never have any doubt the funds were there. “We wanted to make it 100 percent transparent that the exchange had traders’ money.”

The advantages to using BlockEx as an exchange included its banking rails (for easy exit and entrance from fiat), white labeling features, what should have been a larger liquidity pool and an exchange that should soon be regulated.

But without funds, it hasn’t been able to run the marketing campaign to tell that story. Nevertheless, the company hasn’t shut down and its products are coming out, if more slowly, Leonard says.

“We are nicely in a position to generate revenue,” he added.

Looking back, Leonard wondered if his strict adherence to the rules was more of a bug than a feature.

“If we didn’t follow rules so much, we could have taken in a lot more money,” he told CoinDesk.

Ian Allison contributed reporting.

BlockEx website image via Shutterstock

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Former French Central Bank Chief Joins Blockchain Startup Board

Christian Noyer, former governor of the Banque De France and a prominent French economist, is now a member of the board of directors of blockchain startup SETL, the company announced Thursday.

The startup, founded in 2015, offers payment and settlement services built on top of a blockchain network. It aims to help market participants directly transfer cash or other assets with immediate settlements.

The company has received backing from a number of major financial institutions, including Citi, Deloitte, Credit Agricole, Computershare and S2iEM.

In a statement, Noyer said he looked forward to “helping shape this extremely interesting initiative.”

SETL chairman David Walker welcomed Noyer to the board, highlighting his experience with the central banking industry, as well as his familiarity with the financial, regulatory and economic management space.

He added:

“With the encouragement of shareholders and the revenue generating projects we have recently announced we are adding significantly to the strength to the company. At this stage in the development of the technology and its business applications it is important to choose the right projects and to deliver a dependably resilient product to the market.”

The company previously received a license to operate a central securities depository system from the Autorité des Marchés Financiers, France’s securities regulator. The company has targeted an early 2019 roll-out for the depository.

According the company’s website, its platform has an ISO/IEC 27001 certification from the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC), which denotes a specific standard for information security management.

The company also claims its network can interact with existing messaging protocols, including one utilized by the Society for Worldwide Interbank Financial Telecommunication (SWIFT).

Christian Noyer (left) and Timothy Geithner image via U.S. Department of the Treasury / Wikimedia Commons

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Ethereum Devs Propose Activating Constantinople Hard Fork in Late February

UPDATE (Jan. 18, 2019, 15:40 UTC): Constantinople hard fork activation has been set for block number 7,280,000, scheduled to hit on February 27th, according to developer Péter Szilágyi.

Ethereum core developers have proposed activating Constantinople – a planned system-wide upgrade that was called off earlier this week – in late February.

Also called a hard fork, Constantinople is now estimated by developers to go live some time between Feb. 26 and Feb. 28, with a block number to be determined at a future date.

The proposal was made during a core developer phone call on Friday morning, and participants on the call included ethereum creator Vitalik Buterin and other developers, including Hudson Jameson, Lane Rettig, Afri Schoedon, Péter Szilágyi, Martin Holste Swende, Danny Ryan and Alexey Akhunov, among others.

The decision comes after smart contract audit firm ChainSecurity flagged on Tuesday a security vulnerability in one of five Ethereum Improvement Proposals (EIPs) set for inclusion in Constantinople relating to data storage costs on the blockchain.

As a result of the vulnerability, Constantinople, now set for activation next month, will not feature inclusion of the buggy EIP, which will be tested and refashioned for inclusion in a subsequent hard fork.

Instead, Constantinople will be issued in two parts simultaneously on the main network. The first upgrade will include all five original EIPs and a second upgrade will specifically remove EIP 1283.

This strategy – first suggested by Szilágyi during today’s call – is meant to ensure that test networks and private networks that have already implemented the full Constantinople upgrade can easily implement a fix without rolling back any blocks.

“My suggestions is to define two hard forks, Constantinople as it is currently and the Constantinople fix up which just disables this feature…By having two forks everyone who actually upgraded can have a second fork to actually downgrade so to speak,” explained Szilágyi.

The decision comes after smart contract audit firm ChainSecurity flagged on Tuesday a security vulnerability in one of five EIPs set for inclusion in Constantinople relating to data storage costs on the blockchain.

Speaking to CoinDesk on Tuesday, Matthias Egli – COO of ChainSecurity – highlighted that the issue was likely not picked up by core developers when running tests on the software given that the impact is rooted in smart contract development, not necessarily “[ethereum virtual machine] core” development.

A prompt decision to reactivate Constantinople sooner rather than later was needed in part due to prolonged activation of ethereum’s difficulty bomb – a piece of code embedded into the blockchain making block times increasingly longer over time.

Meant to encourage transition to a new consensus algorithm known as proof-of-stake (PoS), a delay of the bomb was suggested in EIP 1234 due to insufficient research at present for a transition to PoS.

Once activated on mainnet, Constantinople will include EIP 1234 and delay the difficulty bomb for a period of 12 months.

Editor’s Note: The article has been updated with additional information.

Binary code image via Shutterstock