VeradiVerdict - International Playbook For Exchanges - Issue #30

VeradiVerdict

Hi, I am Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing into blockchain companies and cryptocurrencies. I focus on early stage investments and want to share my thoughts and what’s going on in the industry in this weekly newsletter.

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Editorials

Pantera has invested into quite a few local cryptocurrency exchanges, covering Latin America, Europe, Asia, Africa, and the Middle East. The thought process is that Coinbase won’t likely dominate the entire world anytime soon, and those that are situated in these geographies have an advantage of knowing the local culture, being able to recruit and market, and having the ability to build relationships for banking and regulations.


The biggest risk of investing in an exchange internationally is the potential of regulatory crackdown. Before we make an investment, we travel to the geography to chat with banks and legal experts in the region. Even after coming out confident, you’re still banking on the entrepreneur to continue to build the company brand, strengthen the relationship with regulators, and to de-risk the investment opportunity by educating the central bank and creating/obtaining the necessary licenses for fintech or cryptocurrencies.


The hope is for governments and banks to work with the leading exchanges to develop regulations/licensing so that there is clarity and protection for customers. In negative instances, countries like China and India have made it very tough for exchanges to operate by blocking their access to banking. Earlier this week, Mexico also announced that they would like banking institutions to distance themselves from crypto exchanges.


We’ve seen this story before of blockchain banking access to exchanges and those companies have been agile through a few different strategies:

  • Creating an offshore entity and obtaining licenses/banking there

  • Setting up crypto-to-crypto exchange

  • Enabling cash-to-crypto through a local bitcoins equivalent

  • Looking into setting up a decentralized version of their exchange

The bet is that the teams will figure out ways to navigate the hurdles and continue their business, keeping a stronghold on their geography but opening up avenues for international expansion.

Digests

95% Of Reported Bitcoin Trading Volume Is Fake, Says Bitwise

The vast majority of reported bitcoin trading volume is false. How many exchanges provide reliable data?

Presentation to the U.S. Securities and Exchange Commission

The discussion concerned NYSE Arca, Inc.’s proposed rule change to list and trade, pursuant to NYSE Arca Rule 8.201-E, shares of the Bitwise Bitcoin ETF Trust.

Sand, Death and Cryptocurrency: Life in a Decentralized Syria - CoinDesk

I had previously written about the potential of blockchain and cryptocurrency in Rojava. I felt that while the region lacks the basic security and resources offered by the West, it has something the West doesn’t have – the opportunity for a new system of governance to be realized.


In the Tweets

Dan Zuller

@danzuller

1/ Just attended a very interesting @duffandphelps luncheon on valuing #cryptoassets. Here’s a thread on my key takeaways, as I understood them.

12:25 PM - 20 Mar 2019

jack

@jack

#BitcoinTwitter and #CryptoTwitter! Square is hiring 3-4 crypto engineers and 1 designer to work full-time on open source contributions to the bitcoin/crypto ecosystem. Work from anywhere, report directly to me, and we can even pay you in bitcoin! Introducing @SqCrypto. Why?

2:58 PM - 20 Mar 2019

News

Circle CEO: Cryptocurrency Business Is Down But We're Still Growing | Fortune

Circle CEO Jeremy Allaire spoke to Fortune about the cryptocurrency market downturn, his acquisition of SeedInvest, and Facebook.

Crypto Mining Giant Bitmain's IPO Application Has Officially Expired - CoinDesk

Cryptocurrency mining equipment maker Bitmain’s application for an initial public offering (IPO) on the Hong Kong Stock Exchange (HKEX) has officially lapsed, meaning no such transaction is happening anytime soon.

Regulations

New regulation would effectively ban crypto exchanges in Mexico | Coin Center

Bucking international trends, the Mexican central bank would deny exchanges a sensible path to regulation and deny Mexicans safe access to financial …

Did the SEC Chairman Confirm Ethereum Isn’t a Security? Not Quite, but It’s Optimistic

Ethereum is most likely not a security under U.S. laws, but a statement by the SEC chairman did not confirm it.

Swiss Federal Council Initiates Blockchain Law Consultation Period

As announced in late 2018, the Swiss Federal Council proposed specific adjustments in the existing federal law for the blockchain industry.

New Products and Hot Deals

BitGo Launches Custody for Blockchain Capital’s Security Token BCAP

BitGo clients will be able to hold their BCAP assets using qualified and regulated custody service BitGo Trust Company.

Lock Up Ether, Get Free Crypto: Twist on Airdrops Attracts Top VCs - CoinDesk

A startup offering a new twist on token airdrops has raised $2 million from a group of notable investors, CoinDesk has learned.

Numerai Token Sale Raises $11 Million From VC Firms Paradigm, Placeholder - CoinDesk

The hedge fund and predictions market startup Numerai just closed an $11 million round in March led by Paradigm and Placeholder strictly by selling NMR tokens, first launched through an airdrop in 2017.

Meet with Me

Meet with Me

San Diego, April 12

Los Angeles, April 27

New York, Ethereal Summit, May 10-11

New York, Consensus Conference, May 13-15

New York, Token Summit, May 16

Additional Info

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