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

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


Claire Cummings

020 7585 1406


Auditors grapple with crypto and blockchain

Top accountancy firms have begun to offer auditing services to companies involved in the cryptocurrency sector. Despite concerns about fraud and money laundering and a lack of consensus about how digital assets should be accounted for, major accountancy firms have begun hire specialised staff and develop their own in-house technologies to offer services in relation to digital assets as their clients have invested in that space. (Source: “Auditors grapple with crypto and blockchain”, 29 October 2018, Financial Times available at


Cummings’ and TeamBlockchain’s Take

As professional service companies such as law firms and accountancy firms are finding their clients interested and investing in cryptocurrencies, these firms have begun to offer services to their clients in relation to this new sector. TeamBlockchain, together with international law firm Fieldfisher, offers a Crypto Surgery service which can provide a general overview of cryptocurrencies or bespoke advice about a particular issue facing your firm or your clients. Please see the bottom of this newsletter for more details about the Crypto Surgery.


IRS Advised to Provide Better Guidance on Cryptocurrency Transactions

The Information Reporting Program Advisory Committee makes periodic recommendations that the IRS needs to take in order to improve its operations. This year’s report from the Committee advises that the IRS needs to provide more detailed guidance on how to treat Bitcoin and other cryptocurrencies. The report notes that IRS Notice 2014-21 provides that virtual currency is treated as property for US federal tax purposes, there are still questions about the tax consequences of cryptocurrency transactions. (Source: “IRS Advised to Provide Better Guidance on Cryptocurrency Transactions”, 26 October 2018, available at


Regulation could 'backfire' and break up the UK crypto market, MPs warned

Experts have expressed concern that any attempt to tame the “wild west” of cryptocurrencies could potentially backfire to the detriment of the UK fintech market and potentially penalise any other kind of asset. Patrick Curry, chief executive of the British Business Federation Authority has warned that inappropriate legislation could result in crypto exchanges moving out of the UK and damage the UK’s standing as a fintech hub. MPs are attempting to balance innovation in the sector with calls for regulation of cryptocurrencies after widespread reports of fraud and money laundering. (Source: “Regulation could 'backfire' and break up the UK crypto market, MPs warned”, 29 October 2018, available at


Japan grants cryptocurrency industry self-regulatory status

Japan’s Financial Services Agency (FSA) on Wednesday gave the cryptocurrency industry self-regulatory status, permitting the Japan Virtual Currency Exchange Association (JVCEA)to police and sanction exchanges for any violations. The JVCEA now has the right to set rules to safeguard customer assets, prevent money laundering, give operational guidelines and police compliance. A senior FSA official noted that “[i]t’s a very fast moving industry. It’s better for experts to make rules in a timely manner than bureaucrats do”. (Source: “Japan grants cryptocurrency industry self-regulatory status”, 24 October 2018, available at


Brewdog brand welcomes Bitcoin cash

Scottish firm Brewdog will be accepting Bitcoin as payment at its Canary Wharf location. Brewdog believes it shares an ethos with the developers and miners of cryptocurrencies – to challenge perceptions and to be bold and uncompromising and that “adopting alternative payment options for craft beer is a natural fit”.(Source: “Brewdog brand welcomes Bitcoin cash”, 15 October 2018, available at


Impending Central Bank Digital Currencies are the Inevitable Future: Dash Coin CEO

In an interview with Cointelegraph, Dash Core Group CEO, Ryan Taylor stated that a central-bank issued cryptocurrency is the “inevitable future” and that the “free market can ultimately design the better money than the government”. He also predicts that the U.S. may kick-off with regulations as early as 2019, however, “the smaller nations will move first as the risks [for them] are lower.”



Given the current brouhaha and following a lead from the Petro coin backed by Venezuela's oil reserves, could we see a Saudi coin backed by its vast oil reserves? Which could then be followed by the Saudis selling oil priced in Saudicoin rather than USD and depart from the agreement that they’ve had with the Americans going back to the 1970's. The USA agreed to give the Saudis military protection if the Saudis priced their oil in USD and then used their surplus USD to buy US treasury notes.

However, now according to an article on ( the Saudis have 250,000 troops, 844 planes and sovereign wealth funds of over $800Billion. Furthermore, Saudi Arabia has the highest military expenditure per capita (2,107.42 USD$) in the world. The top 10 countries by military expenditure per capita are: Saudi Arabia, Israel, United States, Oman, Singapore, Kuwait, Norway, Australia, Bahrain, France.( Stockholm International Peace Research Institute for the year 2017).So do the Saudis need the strong arm of Uncle Sam like they used to? If nothing else the Russians Iranians and Chinese would love to not have to buy USD in order to buy oil so what impact could a Saudicoin have on the mighty greenback?


Mastercard seeking to patent fractional reserve banking for Blockchain assets

MasterCard’s latest patent filing for fractional reserve banking for cryptocurrencies could help Cryptos become easier to use. It is rather Ironic that MasterCard, which has historically been critical of cryptocurrencies, is now looking at ways to use "traditional payment networks and payment systems technologies in combination with blockchain currencies [to] provide consumers and merchants the benefits of the decentralized blockchain…". If the MasterCard patent is granted, it could potentially allow millions of merchants globally to accept cryptocurrencies to pay for goods and services and therefore boost the accessibility and use of cryptocurrencies for the public. In summary:

• Fractional reserve banking is the problem Bitcoin wanted to defeat
• The patent will track crypto assets and fiat assets concurrently
• MasterCard now sees a benefit to mixing crypto and fiat currencies

(Source: Mastercard Makes a U-turn Seeking to Patent Fractional Reserve Banking for Blockchain Assets, 27 October 2018, available at


Stock market plunges but has no impact on crypto: no correlation?

Similar to gold and other types of precious metals, the value of the crypto market solely depends on the supply and demand within the market, unaffected by the performance of the global economy. While many people are concerned about the volatility of crypto asset prices on a risk adjusted return basis crypto assets can offer attractive Sharpe ratios and uncorrelated returns which may explain why there is continued interest from institutions including hedge funds in this asset class. As we see more stablecoins, asset backed security cryptoassets and greater volume from institutional investors volatility for this new asset class ought to reduce in any event. (Source: Stock Market Plunges But Has No Impact on Crypto: No Correlation?, 25 October 2018, available at:


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:;; and



Request for reader feedback and requests

If there are any topics you’d like to see covered in next week’s version of Crypto Bytes or if you have any feedback on this or past versions of Crypto Bytes, please contact Claire Cummings at

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19 05 2019

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