What happened all the institutional interest in crypto that we heard so much about in the last year?


Last year was a hyped up year for Bitcoin, blockchain, and cryptocurrency. On Monday, news emerged that Jamie Selway, who was leading Blockchain’s Wall Street push, left the company after seeing low demand. And at Coinbase, the person hired to oversee the company’s institutional business, never actually started, as the exchange narrows its focus to attract large crypto investors, rather than financial institutions.

With laws pending that would cut the industry some slack from regulators, perhaps it was a bit too soon for that wave to materialize. The SEC is said to be pursuing another crypto enforcement case, this time against the messaging startup Kik, which raised $100 million in a high-profile ICO. On Capitol Hill, one lawmaker is weighing simplifying rules governing crypto, which we discuss more below. If passed, those laws could pave the way for bigger players to get involved.

Another thing to note is that Rep. Darren Soto of Florida is developing favorable legislation for the crypto industry, a Singapore-based crypto fund posts a 400% return amid a bear market.

All of these recent news shows that the crypto industry isn’t looking too “bright” and that all the interest from insititutional interest seems to have shifted away. This may also be due to the recent lawmakers and the government shut down as explained below.

Lawmakers looking to ease things up for the crypto industry

Darren Soto’s proposal, which draws from legislation introduced the last term by Mr. Soto and Rep. Warren Davidson, R-Ohio, would create three different categories of digital currencies and identify a single financial regulator responsible for overseeing each.

Despite objections from lawyers in the cryptocurrency industry, the SEC has maintained that most digital tokens are securities, and has begun pursuing enforcement cases against companies that failed to register their offerings. The industry, in turn, has tried to thwart the SEC’s actions by lobbying Congress to pass new legislation that identifies classes of tokens that aren’t securities.

Under Rep. Soto’s approach, digital assets would be divided into the categories of “digital security,” “digital token” and “digital commodity,” according to Bill Rockwood, a legislative assistant to Mr. Soto. Digital securities would refer to stocks, bonds and other assets that are represented by tokens, while digital commodities would encompass cryptocurrencies like bitcoin and ether, which the SEC has said are decentralized enough not to fit the definition of a security. Digital tokens would be defined as assets that don’t represent a financial interest in a company, among other conditions, but it isn’t clear exactly how they would be distinguished from digital commodities.

The SEC would maintain jurisdiction over digital securities, while the FTC would regulate digital tokens and the CFTC would oversee digital commodities.

Rep. Soto hopes to increase funding, possibly by as much as $20 million, for those regulatory agencies, which have had to divert resources to efforts overseeing crypto, Mr. Rockwood said. He added that the plans are still in flux, and that Mr. Soto, who was named co-chair of the Congressional Blockchain Caucus last month, is looking for input on the details.

The plans under consideration would align U.S. crypto policy more closely with that of other developed nations, such as the U.K. In a January report, the Financial Conduct Authority, a British financial regulatory body, identified the same three categories of cryptocurrencies, though it referred to “exchange tokens” rather than “commodity tokens.”

It is unclear what kind of support Mr. Soto’s proposal will have in Congress. A centrist Democrat, Mr. Soto’s views on loosening regulations for the cryptocurrency industry have so far been more closely aligned with those of Republicans, and they could face more opposition in a Democratic-controlled House. But lawmakers on both the left and right have taken an interest in the issue, and their main challenge will likely be educating other lawmakers about their cause.

Notable hires in crypto

Here are some notable hires in crypto:

  • Saurabh Pathak, a former executive at BlackRock, joined Blockstack PBC as financial controller.
  • Enterprise blockchain company R3’s managing director and global head of services, Brian McNulty, and chief administrative officer, Lauren Carroll, are leaving the company.
  • Bob Summerwill, who previously worked at ConsenSys and the Ethereum Foundation, is joining the ETC Cooperative as executive director.  

With all that said, the deal flows within the crypto and blockchain space is still looking very strong:

  • Polkadot, a startup creating software to allow interoperability among blockchains, is raising up to $60 million at a $1.2 billion valuation.
  • BRD, a San Francisco–based crypto wallet maker, raised $15 million from SBI Holdings in a Series B round.
  • RealBlocks, a company developing a platform for tokenized shares in real estate, raised$3.1 million in a seed round led by Morgan Creek Digital.
  • The Graph, a blockchain data protocol, raised $2.5 million in a round led by Multicoin Capital.
  • BitTorrent, the file-sharing company, raised $7.2 million in an ICO that sold out within minutes.

 


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Edith Muth

Edith Yue is CryptoMeNow's analyst. She loves to do intensive research on how blockchain will make an impact in our society. You can contact Edith at Edith@cryptomenow.com

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