A partnership finds two India-based startups seeking to provide tools to crypto users who may need to report gains and losses on their 2018 taxes.
Ether Capital is positioning itself to be the first Ethereum-focused publicly traded company. Having already raised $45 million through a private placement, the Toronto-based firm is now close to finalizing the reverse takeover (RTO) of a Vancouver shell company by mid-April.
“Ether Capital is a technology company focused on building the central business and investment hub for the Ethereum ecosystem,” explained Ether Capital CEO Michael Conn in an interview with Bitcoin Magazine.
“We feel that being publicly traded, and therefore transparent, gives us a significant competitive advantage in the marketplace and helps protect us against the regulatory headwinds that ICOs [initial coin offerings] have been recently facing.”
Ether Capital aims to bring some clarity to an industry that has been largely opaque. The lack of transparency and the concerns around ICO-related fraud have recently led to a clampdown of sorts on ICOs and exchanges by the U.S. Securities and Exchange Commission (SEC) and other global financial regulators.
“Approximately 90 percent of ICOs fail,” noted Conn. “It’s unclear if some ICOs which have raised millions of dollars will even come to market.”
Ether Capital’s plan is to set the proceeds from its private placement aside for working capital and to acquire ether, the native currency of the blockchain-based platform Ethereum, once they complete their RTO in mid-April.
“We believe ether is a strategic asset in and of itself and are bullish that it will appreciate in its own right,” said Conn, in spite of recent price corrections that have seen ether decline to the $300 handle, though it has recovered to above $400 at the time of writing.
Ether Capital then plans to use that ether first to acquire a core Ethereum-based blockchain business and then to buy or build businesses around it, in order to create an interoperable technology company.
“We want to create accretive value by building a true business, rather than acting as a venture capital firm that makes 10-15 investments and is pleased if two or three appreciate in value,” the serial entrepreneur explained. “We are really looking to be a meaningful alternative to both ICOs and venture capital. We are not precluding ourselves from collaborating with VCs or private investors in any of our investments, but ultimately [we] need to see how a business fits in to our broader vision of interoperability.”
He views Ether Capital’s model as similar to Google’s, where Alphabet is the holding company, and other companies like Search, Gmail, and Google Plus, etc. feature some level of interoperability with each other, while contributing to the growth of the greater whole.
“As the ICO marketplace comes under greater scrutiny from the SEC, the fact that we are a regulated and publicly traded company should shield our companies,” said Conn. “They will likely not be subject to the same constraints from the SEC as companies that choose to go the ICO route.”
“While a lot of capital has been raised to date through ICOs, the SEC is now calling some of them securities and subjecting them to the Howey Test,” Mr. Conn observed. “These regulatory hurdles are making ICOs a much more difficult path for raising capital.”
The Venture Capital Role
There are venture capitalists in and around the space, but they want a piece of the business and they want to see liquidity.
“Very few businesses in the blockchain space are seeing tremendous revenue right now, which makes it dilutive and somewhat difficult to operate under the umbrella of a VC fund, though not impossible,” said Conn.
“We are effectively creating a pool of publicly traded permanent capital. The level of regulatory scrutiny we will be subject to such as quarterly investment calls, quarterly financials etc., will provide cover to those businesses underneath us. They won’t need to face regulations head on, as they would have if they had raised capital via an ICO.”
Ether Capital has conferred with financial regulators and exchanges in Canada in the lead-up to its reverse takeover and the private placement.
“They have been supportive and we feel that through our funding mechanism we are effectively de-risking the buildout for whatever businesses we end up taking on,” said Conn. “We believe that this creates a unique space where our businesses can operate and focus on growing and creating shareholder value.”
“It’s really a regulatory clampdown that’s happening in the ICO market and that is where Ether Capital fits in as a solid alternative.”
Ether Capital is backed by OMERS, one of the largest pension plans in Canada, as well as Purpose Investments, a relatively large Toronto-based asset management business.
The Ether Capital board consists of well known individuals such as Joey Krug, founder of Augur and Co-CIO of Pantera Capital; John Ruffolo, CEO of OMERS Ventures; and Som Seif, CEO of Purpose Investments. Conn himself comes from a strong asset management background, having held key executive roles at firms such as AllianceBernstein, TCW and Quail Creek Partners. The team is already evaluating deal flow from early stage incubations to more established businesses.
“We are fortunate to have a deep and diverse network across the Ethereum community which provides us with well-curated deal flow,” says Mr. Conn. “We are looking to be a meaningful actor in the space, but will not do any transaction unless we feel that the potential for shareholder value creation is greater than the value of ether. Our goal is to ensure our shareholders and the Ethereum community both benefit through the value we are creating.”
This article originally appeared on Bitcoin Magazine.
Financial institutions in Canada have largely embraced blockchain technology, with most major banks, including the central Bank of Canada, conducting pilot projects or at least research into the uses of blockchain technology in banking. In fact, the Bank of Canada has gained a reputation for blockchain-friendliness with its experiments with mock digital currencies and payment systems on the Ethereum blockchain.
As for bitcoin and other cryptocurrencies, they’ve mainly been getting the cold shoulder from Canadian banks, with most crypto startups having some difficulty getting bank accounts and accessing other banking services.
Addison Cameron-Huff, a Toronto-based technology lawyer and the president of Decentral Inc., told Bitcoin Magazine:
“Banking is still difficult in the Canadian blockchain industry. And especially so for businesses at the interface of the banking system and crypto.
“I don’t think any of the banks can be said to be very friendly in terms of business banking services (although they have made multimillion investments in blockchain companies).”
ATB Financial Steps Up to the Plate
Not so for ATB Financial, a financial institution based in the province of Alberta.
ATB Financial has established an Office of Innovation with campuses in Calgary and Edmonton, Alberta, designed to look at ways to assist new innovative startups, including blockchain and cryptocurrency businesses.
In an interview with Bitcoin Magazine, ATB Financial’s innovation director, Mike Brown, said:
“We noted that access to basic business banking services was difficult for startups in the cryptocurrency space to acquire. We have recently undertaken a pilot, however, to provide banking services for a small group of cryptocurrency startups in order to understand how to mitigate those barriers that do exist for financial institutions.”
Brown says ATB’s pilot project is mainly meant “to build [their] knowledge and understanding of the nuances and unique challenges associated with this industry.”
As a qualifier, Brown notes that providing banking services to a cryptocurrency exchange, for example, doesn’t mean ATB Financial is either endorsing or providing an opinion of cryptocurrency as an investment vehicle.
Creating Smart Contracts for the Oil and Gas Sector
Oil and gas are the mainstays of Alberta’s economy; the process of paying royalties is now being simplified by ATB Financial’s work in helping to put oil contracts as smart contracts on the blockchain.
Brown told us:
“ATB has built a proof-of-concept blockchain to streamline oil and gas royalty payments. We have validated the model with the industry and have recently engaged two large industry players in designing the next round of solution development and pilot testing.”
Contract negotiations are done separately and then cemented onto the blockchain with ATB only seeing the payment details. All other terms are kept confidential among the negotiating partners.
Dave Bradley is the founder and chief innovation officer of Oleum Capital, an Alberta-based oil and gas services company working with ATB and regulators to launch an energy, oil and gas ICO. Bradley told us:
“ATB’s willingness to tackle the tough issues around AML/KYC in the Bitcoin and blockchain space has empowered a new wave of innovation in the province of Alberta.
“What we are doing at Oleum Capital (our oil and gas backed ICO) wouldn’t be possible without solid banking partners giving us a seat at the table,” added Bradley.
Alberta Is Crypto-Friendly
The province of Alberta has always prided itself on being business-friendly and open to new innovation.
“Generally within Alberta there is strong economic development support to support the growth of new industries — especially when they are able to leverage the strong human-capital that already exists here. To that end, Alberta lives up to its entrepreneur-friendly status and does approach most startup activity (including that in the realm of blockchain [technology]) differently.”
Brown told us there is a lot of activity in the crypto field right now in Alberta:
“There are currently several new cryptocurrency businesses being created in, and also moving to, Alberta. There are new exchanges, mining operations and ICOs.
“Being able to provide a solid banking relationship has been a critical component for many of these businesses. From the mining perspective, Alberta is taking off and there are several new large-scale installations taking place as we speak.”
A keen observer of the Canadian crypto scene, Amber D. Scott, CEO of Outlier Canada, said:
“It’s encouraging to see ATB taking an open approach to Bitcoin and blockchain companies. Mike Brown has a fascinating role — one that can help to build a bridge between the world of traditional banking/finance and technology. Canada has spawned some world-leading companies, but we’re not going to be able to keep them unless they can access basic services like banking.”
Cameron-Huff thinks there may be some movement in Canada toward a friendlier relationship between banks and cryptocurrency startups:
“Banks are still very wary of the industry and they don’t want exchange-like businesses, but the banks are slowly starting to understand that most people in the crypto space are not handling money — they’re developing new software.”
Correction: ATB Financial is a financial institution, not a bank. An earlier version of the story has been corrected to reflect this.
This article originally appeared on Bitcoin Magazine.
A study of historical bitcoin data makes a strong case in favor of the bulls for Q2 2018.
The cryptocurrency project “Ravencoin” published its first white paper on April 3, 2018. Entitled “Ravencoin: A Peer to Peer Electronic System for the Creation and Transfer of Assets,” the document is authored by CoinCPA founder Tron Black and Chainstone Labs founder Bruce Fenton, and seeks to offer information about the coin’s features which, until now, have largely been hidden from the public eye.
Ravencoin (RVN) was officially launched on January 3, 2018. Its website states that it “aims to implement a use-case-specific blockchain, designed to efficiently handle one specific function: the transfer of assets from one party to another.” Up until the publication of its white paper, most reading material relating to Ravencoin dealt with its ASIC-resistant hashing algorithm known as X16R.
Per the algorithm’s related paper, the “fixed order of ordinary hashing algorithms” aids in the construction of ASIC miners, but the X16R system consistently works to avoid this problem and others like it by “disrupting” these orders.
In correspondence with Bitcoin Magazine, Black said that RVN bears several resemblances to Bitcoin, with many of its advantages being extended to assets. In the future, he says Ravencoin will also bear features similar to Ethereum’s ERC20 and ERC721 contracts.
“The code can be duplicated, but our community is unique, and the response has been incredible,” he said. “RVN is very different than recent ICOs and coins that have centralized control. The community is run by others; it has a very early Bitcoin feel, so for anyone who loved the early Bitcoin days when the community was open, cooperative and super-friendly, they should take a look at RVN.”
Phase one for the coin is complete. An ASIC-resistant, proof-of-work coin that can be used as a platform for assets has been developed, and platform speed has been increased for future scalability.
Black says the next phases, which will be covered in a second white paper, will involve creating unique tokens, developing a messaging channel to allow communication between token issuers and holders, and adding issuable assets which he claims will be “much easier than existing solutions.”
“We’re not telling people how to use assets,” says Black. “We have a few use cases in mind, but as we’ve seen over the last few years, crypto platforms unlock tremendous creativity. Now that value moves as easily as email, we hope to provide an easy-to-use platform for anyone to make their own token and add their own value.”
Black also says that in the coming months, RVN holders will have the option to cast lodging votes. Most traditional shares are held in “street name,” which means casting any kind of vote can be difficult. Nasdaq, for example, must often hire third-parties to obtain the addresses of its shareholders. From there, voting forms are sent to the shareholders’ addresses, who then send their votes back via postal service.
It’s a long and potentially outdated practice, and Ravencoin’s white paper says it’s looking to digitize the process by bringing about speedier, more effective methods of communication to shareholders:
“The holders of a token can be notified of the vote, and, by automatically issuing a VOTE token to every holder, the vote can be automated from the client or through a web or mobile interface using the protocol built into Ravencoin. Tokens are created to represent votes. Ravencoin will create an exact number of VOTE tokens and distribute them 1:1 to the token holders. These votes can be sent via the protocol to addresses that tally the votes.”
Presently, Ravencoin doesn’t boast the power or volume of competing currencies like ether or XRP. The asset has a total market cap of roughly $30 million and is trading for about $0.03 at press time. It also does not sit among the top 100 coins.
However, this hasn’t stopped figures like Overstock.com CEO Patrick Byrne from investing hefty sums of money into its technology. In a recent interview with Business Insider, the entrepreneur and business executive says he’s already put millions of dollars into Ravencoin, which he alleges has more to offer than people realize.
“We think this coin actually has quite a future,” he said. “It’s about — it’s bitcoin, but a thousand times more energy efficient, and there are other real interesting virtues to it.”
Black claims that other organizations are now beginning to show interest in RVN assets for their projects, and he expects that enthusiasm to grow.
“Once we have assets working, we expect to have lots more interest as RVN is compared to other platforms,” he states. “Right now, we are just allowing organic growth where early adopters can mine/trade RVN tokens.”
Black describes the project as the “brainchild of Bruce Fenton.” Aside from his work with Chainstone Labs, Fenton is also the former executive director of the Bitcoin Foundation and the current managing director of Atlantic Financial Inc.
In an extended Twitter thread, Fenton claimed to be holding over six million RVN coins, all of which he says were mined through “fair” practices.
Fenton also pointed out that Ravencoin employs no “set asides” or “premined coins” and that the paper isn’t asking for any money. He says it is a legitimate technical paper and that Ravencoin is a “free and open-source community project.”
“Bruce has really helped set the tone for this project,” Black said. “His connections to the crypto community have really helped bring in the right people.”
This article originally appeared on Bitcoin Magazine.
With notes from Evgeny Korolev
Here are some of the top stories from the blockchain and cryptocurrency space in Russia over the past week.
New ICO Legislation Stresses Liquidity, Formal Registration
The Russian Ministry of Communications has introduced a bill that will regulate ICO registration and project development.
The ICO and digital token legislation specifically looks to provide protections and liquidity for investors. According to the bill, ICOs must register with the Russian government and provide proof of at least a 100 million ruble operating budget, while the Ministry of Communications and Mass Media is charged with overseeing a five-year accreditation period for each project.
Among a laundry list of other requirements, the bill states that it is “the duty of the person issuing the digital tokens, [sic] to redeem the digital tokens at the nominal price (the price of placing the digital token) from any bearer of the digital token on the basis of an irrevocable public offer.”
This mandate is meant to pressure ICO teams into spending proceeds on project developments, but opponents aren’t convinced that it will sway them to this effect. Arseniy Schelcin, director of the Russian Association of Cryptocurrencies and Blockchain, finds that “the document contains vague wording that can cause conflicts” as it “is not synchronized with existing bills.”
“It is difficult to comment on this decision in any of its variations, because it is divorced from reality,” he told Russian news outlet, Kommersant.
Russia’s First Ruble-to-Bitcoin Exchange Opens in Moscow
Not to be confused with Sberbank, a popular Russian bank, Sberkoin opened up its office in Moscow last week. The exchange is the first of its kind in Russia, allowing its customers to purchase bitcoin directly with the Russian ruble. At this time, the exchange only offers fiat pairs with bitcoin.
The exchange claims to be operating within legal limits, though with unresolved cryptocurrency legislation wading through Russia’s legislature, its legal status is somewhat in a state of limbo. Still, current laws do not prohibit the sale of bitcoin in Russian territories, so Vladimir Yurasov, a partner at a Moscow law firm, argues that there’s no reason for concern.
“In any democratic society, including Russia, if something is not prohibited, it must be legal. In the federal legislation there are no provisions prohibiting the use of bitcoin in financial transactions. The purchase and sale of bitcoins does not violate the Civil Code.”
Russian Central Bank Looks to Complete Integration of Masterchain DL
The Russian Central Bank is considering using Masterchain, an Ethereum-derived protocol, to send financial messages through SWIFT within the Eurasian Economic Union.
Under the supervision of Russia’s Central Bank, the Russian Fintech Organization has been developing the Masterchain distributed ledger since 2016, testing its first operational version in 2017.
Olga Skorobogatova, Deputy Chairman of the Russian Central Bank, believes that the government will “discuss the options for using this project already this year.” Originally developed for Russia, the bank hopes to deploy the system throughout the European Economic Area.
Miners Tagged With Taxes
The Russian Government is amending tax code to accommodate miners.
Circulating through Russia’s lower legislative house, the bill labels mining as an “entrepreneurial activity.” As such, miners will have to register with the government, either as an individual entrepreneur or as a legal entity. Depending on how they register, miners could be subject to a 24 percent corporate tax rate if they register as a legal entity.
In addition to these amendments, Russian legislators are considering a tax of roughly 13 percent on all cryptocurrency investing or trading profit.
This article originally appeared on Bitcoin Magazine.
Over 20 European countries have jointly established a new blockchain group to share technical and regulatory expertise.
Computer users now have one more thing to worry about: cybercriminals secretly taping into your CPU or GPU to mine cryptocurrencies. Due to an ability to access your computer via a web browser, “cryptojacking” is on the rise, cautioned a British government agency.
“The technique of delivering cryptocurrency miners through malware has been used for several years, but it is likely in 2018-19 that one of the main threats will be a newer technique of mining cryptocurrency which exploits visitors to a website,” the UK’s National Cyber Security Centre
(NCSC) wrote in its annual report on April 10, 2018.
Shortly after, popular torrent download site Pirate Bay incorporated Coinhive as part of a new monetization scheme that would replace the advertisements that normally keep the site afloat. “We really want to get rid of all the ads. But we also need enough money to keep the site running,” Pirate Bay said in a blog post on September 16, 2017.
During the later part of 2017, Coinhive clones started popping up left and right. Hackers even found ways to inject the scripts into popular websites like Politifact.com and Showtime unbeknownst to the site owners. Today, the internet is rife with in-browser miners.
As pointed out in the NCSC report, in December 2017, Check Point revealed that 55 percent of businesses globally were impacted by cryptominers. “Popular websites are likely to continue to be targets for compromise, serving cryptomining malware to visitors, and software is available that, when run in a webpage, uses the visiting computer’s spare computer processing power to mine the digital currency Monero,” the NCSC says.
The report also points out that in February 2018, over 4,000 websites worldwide, including many government ones, were affected by the cryptojacking script. The problem was eventually traced to a website plug-in called Browsealoud, used to help blind and partially sighted people access the web.
Using an ad blocker or antivirus program with features that block browser mining is the best way to prevent crypto hijacking, the report advised. (There’s also a Chrome extension called No Coin that blocks cryptocurrency miners like Coinhive.)
This article originally appeared on Bitcoin Magazine.
European law enforcement agency Europol has taken down a criminal network allegedly using cryptocurrency to launder drug money. Tulipan Blanca On Monday, the European Union Agency for Law Enforcement Cooperation (Europol) announced that it had arrested 11 people and identified 137 suspects potentially involved in a criminal network utilizing cryptocurrencies and credit cards to launder money from illegal drug sales. According to reports, Europol’s operation has been named Tulipan Blanca was carried out by the<br />Read More<br />The post Europol Takes Down Major Bitcoin Money Laundering Network appeared first on Bitcoinist.com.