Crypto News: August 7, 2018


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It was only a matter of time before Bitcoin entered politics.

Earlier this week, the North Carolina State Board of Elections Campaign Finance Office denied Republican candidate Emmanuel Wilder from accepting campaign donations in Bitcoin or other digital currency. The Board outlined the following issues:

  1. North Carolina’s campaign finance regulations set monetary limits in US dollars.

  2. Bitcoin and other digital currencies cannot be reliably valued.

Additionally, campaign finance watchdogs have argued that the potential anonymity of digital currencies may make it difficult to comply with state disclosure requirements — both who is donating and the amount that is donated.

This issue is not exclusive to North Carolina though. Last year, the Kansas Governmental Ethics Commission prohibited state and local candidates from accepting campaign donations in Bitcoin. Then in June, a candidate from Missouri was required to return a $130,000 Bitcoin donation because it violated the upper limit for individual contributions ($5,400).

What is the irony in all this?

In 2014, the Federal Election Committee explicitly approved federal candidates to accept campaign donations in Bitcoin. The regulatory body even created and circulated specific rules around Bitcoin donations and collections. Bitcoin and politics don’t only intersect during campaign finance debates though.

The House Ethics Committee now requires any lawmaker to publicly reveal all digital token holdings over $1,000 in value. The first Congressman expected to report his holdings is Bobby Goodlatte, the chair of the House Judiciary Committee (he reportedly owns between $17,000 and $80,000 in Bitcoin, Ethereum, and Bitcoin Cash).

So if Congressmen are holding tens of thousands of dollars in digital currencies and federal candidates are allowed to accept these digital assets as campaign donations, why are state regulatory bodies preventing state candidates from doing the same?

The answer lies somewhere between fear and lack of understanding. In essence, people fear that which they do not understand. This shouldn’t be a viable reason though. The solution to campaign finance rules around Bitcoin should be simple:

  1. Require KYC/AML verification of digital wallets that make political donations.

  2. Require stringent reporting from candidates on who donates and how much.

  3. Require candidates to conform to a single standard for valuing all digital assets.

  4. Require donors to abide by existing campaign finance limits, both individuals and corporations.

These four simple rules should clean up most of the uncertainty. It should lead to a more transparent, fair campaign finance environment, where donors have the freedom to choose which currency they hold their wealth in.

Change rarely happens quickly. However, we are slowly watching digital assets infiltrate every aspect of our lives. As I always say, the virus is spreading…

-Pomp



THE RUNDOWN:

Goldman Sachs is reportedly weighing a crypto custody service: Having launched bitcoin futures trading in May, Goldman Sachs is now pondering the launch of a cryptocurrency custody service. According to Bloomberg, the investment bank is mulling the creation of a secure storage service aimed at crypto funds to help protect them against the risk of hacking. Read more.

Organized crypto ‘trading groups’ manipulated markets to make $825 million in 2018: Cryptocurrency price manipulation is largely conducted by organized “trading groups” using services such as Telegram, according to The Wall Street Journal. A new study suggests that coordinated “pump and dump” schemes have seen traders inflate and crash the prices of various cryptocurrencies this year. As a result, such groups are reportedly generating hundreds of millions of dollars in revenue for themselves, while others get stung by losses once the groups sell off a particular asset en masse. Read more.

Coinbase poaches AWS exec to lead engineering: Cryptocurrency giant Coinbase announced on Monday it has hired Tim Wagner, a veteran of Amazon Web Services, to be its vice president of engineering. In a blog post, Coinbase CEO Brian Armstrong described engineering as core to its strategy of building cryptocurrency products, and said Wagner would be leading and expanding its team of engineers. Read more.

Starbucks tries to clean up its Bitcoin mess: Starbucks announced on Friday that it would be trading in Bitcoin, alongside Microsoft and International Exchange (owner of the New York Stock Exchange), in a partnership called Bakkt. A flurry of news headlines suggested that the announcement meant that customers would be able to pay for their coffees using Bitcoin. This is not accurate. Read more.

Wealth Manager Canaccord: Bitcoin ETF approval more likely in 2019: The latest crypto report from wealth manager Canaccord Genuity posits that a long-awaited approval on a bitcoin exchange-traded fund likely won't come until 2019. In its quarterly update on cryptocurrencies, Canaccord, the largest independent investment dealer in Canada, dives into a range of topics, including security tokens and recent developments in cryptocurrency spot prices. Read more.

Blythe Masters looks beyond finance for next wave of blockchain growth: Digital Asset, the distributed ledger technology company she founded in 2014, is entering a new phase. That new phase involves a partnership with Google Cloud to simplify and proliferate the tech. Read more.

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