Crescent Talks Crypto


Weekly Newsletter

03/13/2018 - 03/18/2018


Google Bans Crypto Ads Starting This June


What happened?

On Tuesday, Google announced it would be updating its financial services-related ad policies to ban any advertising about cryptocurrency-related content. The ban will restrict any company from serving ads through Google even if the offering is legitimate. According to the announcement, the update will go into effect in June of this year. This ban follows Facebook's decision to ban all ads promoting cryptocurrencies at the end of January. Google's announcement, in combination with the Congress hearing regarding ICOs, sent Bitcoin below $8,000 on Wednesday. Meanwhile, a Russian Entrepreneur filed a lawsuit against Google claiming the ban will deprive him of opportunities to invest in crypto projects and find investors to fund his own business initiatives. 

Why does this matter?

Despite Bitcoin and the rest of the crypto market sliding further on Wednesday, this can actually be positive for the space going forward. This ban is obviously targeting the obvious scams that were promising returns as well as guaranteeing the "next Bitcoin". Alphabet makes over 80% of their revenue from Google's advertising, so it's not surprising Google wants to set clear rules to prohibit users from being deceived. While this ban is unfortunate due to legitimate cryptocurrency offerings no longer being able to use Google or Facebook to advertise, most promising projects will be able to find suitable investors without relying on these tech giants. Meanwhile, ponzi schemes and scams which would ultimately hurt the public's perception of the crypto space will hopefully have a harder time misleading investors chasing "easy" gains. 

What’s the word on the street?

Despite Bitcoin falling below $8,000 after the announcement, most of the crypto community seemed to think this was an overreaction. These people are active within the community and rely on resources other than Google Ads to find crypto projects to invest in. Google's ban, meanwhile, is meant to help protect users who don't know any better and dived into the space without reading up. While the crypto market has plunged below $300 billion, CNBC Jon Fortt had some fun pointing out a cryptocurrency Google-served ad up on the CNBC news piece about the Google crypto-ad ban.

google joke.png

What happened?

Last week, the founders of Swirlds, a software platform designed to build distributed applications, launched the Hedera Hashgraph Platform, a public ledger that leverages the hashgraph consensus mechanism. Hashgraph differs from traditional blockchain-based consensus mechanisms in that it uses a gossip protocol coupled with a voting algorithm to reach consensus rather than the computationally-demanding PoW (see additional reading for FAQ on hashgraph). The Hedera hashgraph will also have a native utility token granting holders access to applications on the platform. Hashgraph guarantees Byzantine fault tolerance and its governance structure ensures it will never fork.

Why does this matter?

Blockchain is undoubtedly a game-changing technology, but innovation and success encourages competition. Most of the focus recently has been on competing platforms or applications built using blockchain, but it is important to recognize other competing projects for distributed ledger technology. At the end of the day, blockchain will go mainstream when the user experience is seamless and convenient. The majority of everyday users will not need to understand how it works, as long as it does work. If hashgraph can deliver on its promise as a faster, more secure distributed ledger technology, blockchain enthusiasts would be remiss to ignore its long-term potential.

What’s the word on the street?

Many have anticipated the launch of the Hedera Hashgraph Platform as a challenger to blockchain given its faster transaction speed and ability to scale. Speed tests last year showed hundreds of thousands of transactions per second, which puts its throughput at levels much closer to today's payment giants like Visa. The team expects a beta version to be live in 2018, so it is still a long way away from everyday use. Nonetheless, hashgraph is one project to keep an eye on as its awareness in the community grows.

Where can I read more?

Hashgraph FAQ

Hashgraph Whitepapers Explain Consensus Mechanism

Techcrunch on Hashgraph
ICO drops - Hashgraph

Financial Stability Board Deems Crypto-Assets a Non-Threat


What happened?

The Financial Stability Board, led by Bank of England governor Mark Carney, stated that crypto-assets are not a risk to global financial stability at this time because of their limited market size relative to the financial system. In its letter to G20 finance ministers and central bank governors, the FSB explained its rationale for holding tight on further regulation surrounding crypto asset trading.

"The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability at this time. This is in part because they are small relative to the financial system. Even at their recent peak, their combined global market value was less than 1% of global GDP. In comparison, just prior to the global financial crisis, the notional value of credit default swaps was 100% of global GDP. Their small size, and the fact that they are not substitutes for currency and with very limited use for real economy and financial transactions, has meant the linkages to the rest of the financial system are limited."

Why does this matter?

Regulation is arguably the largest headwind to crypto assets in the near-term. Increased scrutiny should be welcomed by the community as it validates a maturing market, and reading through the tea leaves of regulator commentary can help prepare investors for what is to come. The most recent letter from the FSB is encouraging, but an increase in the adoption or usage of crypto assets will likely change their tone if the market size gets big enough.

What’s the word on the street?

All in all this is seen as a net positive for crypto assets, though investors should keep a pulse on actions from other regulatory bodies as well. Confusion continues to mount regarding which agency will oversee crypto assets given their loose definitions as commodities or securities, but both the CFTC and SEC are likely to increase their influence on crypto asset trading. It is better to be safe than sorry, and any responsible research on digital assets going forward should include a deep dive into the potential regulatory hurdles each token or coin may face. It's a double-edged sword, but regulatory pressures are not going anywhere anytime soon.

Where can I read more?

FSB Letter to G20 Finance Ministers and Central Bank Governors

G20 Watchdog Holds Fire On Cryptocurrencies

G20’s Financial Regulator Rebuffs Countries’ Calls for Crypto Controls

Regulatory Update


Crypto isn’t limited by borders (unless you’re in China) so neither should our weekly regulatory update. Going forward we will try to capture the nuance of global crypto regulation instead of only focusing on the United States.

The IMF chimed into the regulatory debate this week in a blog post that urged regulators to ‘fight fire with fire’. Written by IMF Chief Economist Christine Lagarde the post acknowledges the potential of crypto assets while also highlighting its potential for money laundering and terrorist financing. While this line of argument is not new, it is notable due to the fact that the IMF provides research and policy prescriptions on a supranational level. Ms. Lagarde offers a few potential ways to combat fraud including stronger know-your-customer (KYC) policies and utilizing artificial intelligence to identify suspicious transactions. More importantly she states that regulatory agencies have to cooperate across borders in order to synchronize regulation. Good luck.

Diamonds May Not Be Forever

Another chapter is beginning to unfold in the RECoin and Diamond Reserve Club World saga. You may recall that back in September 2017 the SEC filed a civil complaint against Maksim Zaslavskiy. Both the ICOs were allegedly backed by assets (real estate and diamonds) which drew the immediate scrutiny of regulators. Though the legitimacy of the project certainly deserves scrutiny, the crypto community has been watching this drama because of the precedent that it sets for ICOs. Mr. Zaslavskiy states that his tokens do not pass the Howey test and so cannot be deemed securities.

What we're watching this week:

When: March 19th & 20th, 2018

What: Japanese representatives will push for the adoption of global rules on cryptocurrencies at the upcoming G20 meeting in Argentina. 

Source: Coindesk

Things we're reading this week:

Tom Lee Sees Bitcoin at $91,000 in Two Years

Coinbase's Written Testimony for Subcommittee on Capital Markets, Securities, and Investment

Over 90% of Americans Are Not Into Crypto...Yet

Importance in Keeping Blockchains Decentralized

Anil Lulla