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Welcome to Crypto Bytes, a short briefing on some of the week’s developments in the world of cryptocurrencies.

If you would like to discuss any of the points we raise below, please contact me or one of our other lawyers.  

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Claire Cummings

020 7585 1406
claire.cummings@cummingslaw.com
www.cummingslaw.com


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Cummings Law, Fieldfisher and TeamBlockchain launch Blockchain and Crypto Telephone Surgery to offer rapid bespoke legal advice to businesses in the cryptocurrency and digital payment platforms sector

International law firm Fieldfisher and consultancy TeamBlockchain have launched a Blockchain and Crypto Telephone Surgery for companies looking for expert professional guidance on cryptocurrency and digital payments.   Focusing primarily on issues affecting tokenisation and distributed ledger financial technologies (fintech), the surgery will also offer advice and insights on the wider fintech universe.  Fieldfisher partners and TeamBlockchain consultants will give advice on different regulatory and legal issues in the context of specific industries, supported by relevant, real life examples of how organisations are using blockchain and the increasing role of cryptocurrency in digital business.  Surgery sessions will last between 40 minutes, in the form of one-on-one appointments or small group discussions, as clients prefer. Sessions will be interactive, enabling participants to get a better understanding of the subjects under discussion.  Clients will be asked to provide some prior briefing on their sector of interest, objectives and concerns in order to maximise the benefits they receive from surgery appointments.  This type of consultative support has proved helpful for professional advisors and their clients, who want to be more active in the cryptocurrency and blockchain sectors but lack the in-house skills to realise their ambitions. 
 
Fieldfisher and TeamBlockchain's experts are independent advisors who provide clients with honest, pragmatic advice on a range of fintech issues day-to-day.   These surgeries are designed to provide, swift, tailored advice on an as-need, no obligation basis, with follow-up support available as required.  The cost of each surgery is £500 +VAT and includes a pre-briefing, phone consultation and follow-up materials. For more information, please contact one of the Surgery Team: claire.cummings@cummingslaw.com; tim.bird@fieldfisher.com; and jonny.fry@teamblockchain.net.


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The regulatory cryptogram for cryptocurrency

Cummings Law, Fieldfisher LLP and TeamBlockchain have collectively authored an article in The Fintech Times which covers some of the common legal and practical issues faced by businesses in the cryptocurrency and payment platform sectors.  Topics include an explanation of what is a cryptocurrency, KYC and AML in relation to cryptocurrencies, and a discussion of jurisdictions where a cryptocurrency business might consider as a place of incorporation. (Source: “From bitcoin to blockchain: solving the regulatory cryptogram”, The Fintech Times, 26 September 2018, available at http://thefintechtimes.com/blockchain-cryptocurrency-regulation). 


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Optimism in Chicago for the crypto markets

Although the value of bitcoin, ethereum and other coins has more than halved against the dollar this year and despite the fact that volumes of cryptocurrency trades are lower, Chicago’s proprietary trading industry is increasing its participation in the crypto market.  Market participants have noted that more firms are trading crypto currencies and that more professional traders are in the space.  Despite concerns about security and clearing in the crypto markets, and reduced profit opportunities due to competition, many players in the crypto markets remain optimistic about its future. (Source: Meyer, Gregory.  “Chicago’s sharp traders are natural hunters in the wild crypto markets”. Financial Times, 1 October 2018). 


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Tokenized song is released

Tanya Southern’s “New World” track is a tokenized song which uses Blockchain technology.  Southern stated that she is excited to see how smart contracts will be used to encourage collaboration, transparency and financial participation with fans/consumers.  299 people participated in the creation of “New World” and they will be compensated by receiving backend royalties in Ether to their digital wallets.
 


 

Cummings Law take on creativity with cryptocurrencies

Tokenization is the process of converting rights to an asset into a digital token.  Tokenization offers the ability to take assets that would otherwise be difficult to transfer or subdivide and transforms them into a digital token that is liquid and permits fractional ownership.  As the cryptocurrency markets continue to mature and develop, we expect to see more creative uses of tokenization.


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Bitmain IPO

Bitmain, the world’s biggest bitcoin-mining equipment maker, has filed to list its shares in Hong Kong.  The listing could be the world’s largest cryptocurrency IPO. The prospectus warns investors of the “significant volatility” in prices of cryptocurrencies and its potential impact on the value of Bitmain. (Source: Lucas, Louise.  “China’s Bitmain aims for world’s biggest crypto IPO”. Financial Times, 27 September 2018). 


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JPMorgan expands the Interbank Information Network

More than 70 banks are joining the Interbank Information Network (IIN). JPMorgan, RBC and ANZ have been trialling IIN in an effort to determine if blockchain technology can expedite payments that have errors or require additional compliance checks, which can cause payments to be held up for weeks.  The IIN permits access of all the information through blockchain and thus creates a distributed ledger that the affected banks can review in real time, and thus allowing for almost instantaneous resolution of issues.  JPMorgan plans to continue adding banks to the IIN and hopes to expand the IIN to non-US currencies.  (Source: Noonan, Laura.  “JPMorgan widens blockchain payments to more than 75 banks”. Financial Times, 25 September 2018). 


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Potential crypto exchange in UK

Gemini Trust Company, LLC the US cryptocurrency exchange set up by Cameron and Tyler Winkelvoss, is contemplating a potential move to the UK, according to sources.  Despite the recent call from UK politicians to regulate crypto-asset markets amid concerns about losses for investors and money laundering, Gemini has stated that they are continuing to “…evaluate opportunities that allow the global economy to buy, sell, and store digital assets in a regulated, secure and compliant manner”.  (Source: Murphy, Hannah.  “Winkelvoss crypto exchange explores UK market”.  Financial Times, 24 September 2018).


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Growing interest in Stablecoins

Stablecoins are crypto-assets designed to minimise price volatility.  Interest continues to grow in these stablecoins as more are launched.  The latest stablecoin is the Gemini Dollar, which is issued by Winkelvoss-run Gemini Trust Company, LLC.  The Gemini Dollar is pegged directly to the US dollar and for each Gemini Dollar issued and in circulation, there is a corresponding dollar in a bank account. These corresponding dollars are held at State Street Bank.  (Source: Biggs, John. “The Winkelvoss stablecoin is one small step towards crypto acceptance”,  available at https://techcrunch.com/2018/09/11/the-winklevoss-stablecoin-is-one-small-step-toward-crypto-acceptance/).

In addition, The London Block Exchange recently announced plans to launch a new stablecoin pegged to the British pound called the LBXPeg.  The LBXPeg will be backed by reserves of UK sterling and the 1:1.  Reserves will be held in an account at a third-party bank.   (Source: Williams-Grutt, Oscar.  “A UK start-up is planning to develop a ‘crypto pound’ as the sector goes crazy for ‘stablecoins’”, available at https://www.businessinsider.com/london-block-exchange-plans-crypto-pound-lbxpeg-2018-9?r=UK&IR=T).


 

TeamBlockchain’s take on stablecoins

One of the main concerns investors have about crypto-assets is their price volatility.  Stablecoins offer a less volatile alternative to traditional crypto-assets as they are often pegged to a fiat currency e.g. US$, backed by cash deposits.   In addition, stablecoins enable organisations to transfer value more quickly and more economically than using traditional payment methods. 

TeamBlockchain predicts that we may someday see subcategories of stablecoins such as the following:

Securecoin - a token whose value is secured by cash deposits 
Indexed coin -  a coin whose return is based on a known index e.g. S&P 500, FTSE 100 or the CPI (consumer price index).
Brandcoin - a coin backed by a global brand who promises to repay the holder in the same currency their country of incorporation
Bondcoin  a coin whose value is linked to a bond issued using a blockchain

For a full report on Stablecoins please send an email to: info@teamblockchain.net.

 
 

 


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Cummings

Tel: + 44 20 7585 1406
Mob: + 44 7734 057 327

Cummings Law
42 Brook Street
London Greater London W1K 5DB
United Kingdom

www.cummingslaw.com

14 12 2018

 
 

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