After a year-long bull market in digital coins, SEC and CFTC seem ready to regulate

Leo Zhang

By Leo Zhang

On Tuesday, February 6, 2018 at 10 AM EST, Sen. Michael Crapo (R-ID) and ranking member Sen. Sherrod Brown (D-OH) will gather the Senate Banking Committee to explore oversight role of the the SEC and CFTC over virtual currencies. In a preview of his comments uploaded to the Senate banking website last night (see below) SEC Chairman Jay Clayton says he and CFTC Chairman J. Christopher Giancarlo are "supportive of regulatory and policy efforts to bring clarity and fairness to this space," presumably under existing regulatory regimes. Those aren't sufficient, say the lawyers at CoinCenter, a non-profit which issued a report one week ago entitled, The Need for a Federal Alternative to State Money Transmission Licensing.

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News

Virtual currencies: the oversight role of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission
(U.S. Senate Committee)

"Determining what falls within the ambit of a securities offer and sale is a facts-and-circumstances analysis, utilizing a principles-based framework that has served American companies and American investors well through periods of innovation and change for over 80 years."

As stock-market rout spreads, investors fear markets falling in lockstep
(WSJ, by Amrith Ramkumar and Ira Iosebashvili)

"That has some investors worried that even if some sort of market correction is inevitable, the number of markets moving in tandem raises the prospect of a more severe selloff than what the still-positive fundamentals would warrant."

Commentary

Making a Crypto Utopia in Puerto Rico
(NYT, by Nellie Bowles)

"Puerto Rico offers an unparalleled tax incentive: no federal personal income taxes, no capital gains tax and favorable business taxes - all without having to renounce your American citizenship."

Falling stocks and rising yields aren't the new normal
(Bloomberg, by Komal Sri-Kumar)

"Consequently, the lower equity prices and higher Treasury yields on Feb. 2 and Monday in reaction to the employment report are unlikely to be the final word on where markets are headed. The outlook over the medium-term will more likely be determined by the Trump administration's policy toward global trade and the dollar."

Technical

Bitcoin has a huge scaling problem - Lightning could be the solution
(ArsTechnica, by Timothy B.Lee)

"In the Lightning vision, the old-fashioned bitcoin network becomes a cryptographic backstop for these payment channels. The IOUs are actually cleverly-formatted bitcoin transactions called commitment transactions that haven't yet been submitted to the bitcoin network. A user always has an option to 'cash out' by posting the current commitment transaction to the blockchain and collecting the money she's owed."

Why companies need to implement a 'zero trust' approach to their cybersecurity model
(Dan Patterson)

"So the first component of zero trust is knowing the user, really understanding who the user is in your environment. And as you know, we typically understand users today by their username and password, which is a really primitive way of understanding who a user is. What we really need to implement within our environment is better ways of understanding who that user is. Technology is like multi-factor authentication."