On Tuesday

Walmart has announced that it will be using blockchain technology to track shrimps from India to its stores in the USA following its leafy greens tracking programme, introduced earlier in 2018.

 We’re committed to doing business in India in a way that helps drive economic opportunity in local communities across the country,” said Paul Dyck, vice president of corporate affairs for Walmart Inc., adding, “Through this pilot we are working with our partners and leveraging our global strengths to provide access to blockchain’s innovative technology, which will benefit local farmers and producers, help to transform the food system.”

Blockchain technology enables the digitising of supply chains to improve the traceability, monitoring of produce from farm to fork, and minimising the various records and documentation required - so making the movement of goods globally much more efficient. It also potentially makes it much easier for a global bemouth, like Walmart, to start to pay for the goods with its digital currency, so combining payments with the movement of produce.

Could these types of initiatives start to align the interests of capitalist corporations like Walmart with subsistence farmers in countries like India and so encourage more sustainable and environmentally friendly practices? Walmart’s customers will be able to know where, when, how and who is producing the food on their plate and with this closer identity, hopefully, there will be a greater concern for the longevity of farming methods.


“I deeply believe that money must remain in the hands of states. I am not comfortable with the idea that a private group creates a competing currency. A private company does not have to seek to gain power in this way.” Tim Cook, CEO of Apple

It would appear from this that Apple is unlikely to be issuing its Digital Currency anytime soon. Is this a political statement to curry favour with Washington and other governments, as Apple's tax affairs are challenged and the EU asks for $14 billion of tax?


Last Thursday

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Last Tuesday

Is it any coincidence that almost the same day as the SEC’s press announcement about Block.one, a ‘posse’ of Crypto exchanges – Anchorage, Circle, Kraken, Bittrex, Greyscale, Genesis, DRW Cumberland and Coinbase launched an ICO rating service to help determine if an ICO is a security or not?

They have set up a Crypto Rating Council (CRC) and intend to publish ratings on ICOs on a 1 to 5 scale - 1 signifying a ‘Utility token’ has few or no characteristics consistent with a traditional regulated security i.e. Bitcoin A rating of 5, the CRC suggests that the token has many characteristics potentially of a security.

Mary Beth Buchanan, Kraken’s general counsel, was quoted in the WSJ as saying, “It does show the SEC what each exchange is doing to come to a decision.” However, the Crypto Council’s Frequently Asked Questions recent release stated, “The framework is the Council’s attempt to provide a consistent analysis which the members find useful but it is not legal advice and does not reflect the opinion of any member or outside counsel of whether any given asset is a security.”

Interestingly, the CRC has determined that XRP from Ripple (which is trying to compete with SWIFT) and which has always argued that it is a utility token, has been given a rating of 4. So, will this encourage regulators, in particular, the SEC, to look again at Ripple, on the basis that it is indeed a security token, and which potentially may have raised capital and not meet SEC regulations? After all, Ripple has been served a class action alleging that it has sold hundreds of $ millions of tokens without complying with the SEC security regulations.

At least the CRC is attempting to offer guidance and, no doubt, others will look to amend and try and improve on offering different guidance. This has to be welcomed, as opposed to ignoring this issue and waiting for the SEC to knock on their door which is the tact some organisations have currently taken.


Block.one, according to a Security Exchange Commission (SEC) press statement, has been obligated to pay $24 million in penalties for conducting an unregistered securities sale by carrying out its Initial Coin Offering (ICO).

Block.one is the creator of EOS, which has issued over $4.1 billion of tokens, making it the largest ICO ever. Being fined $24 million (only 0.0058%) to get an SEC waiver looks like a stunning deal for Block.one, so it is of no surprise that within hours of this announcement EOS’s token price was up by 9%.

Block.one did not provide ICO investors with the information they were entitled to as participants in a security offering,” said Steven Peikin, Co-Director of the SEC’s Division of Enforcement.  “The SEC remains committed to bringing enforcement cases when investors are deprived of material information, they need to make informed investment decisions.” 

As an aside, Block.one (according to a Bloomberg report in June 2018) was holding most of its current $2.2 billion in US Government bonds and 140,000 Bitcoins.

From this information, if you assume Bitcoin price is $8,200 then Block.one’s holdings are worth $1.19 billion which, added to the $2.2 billion of US bonds, ought to imply that EOS capitalisation ought to be at least $3.35 billion and not $2.9 Billion. No wonder Block.one was reported to be looking to buy back its stock. If Block.one did manage to buy back all the EOS tokens, then presumably Block.one’s ordinary shareholders could turn Block.one into a $450 million ‘cash shell’.

Given this Block.one ruling and the on-going battle that the SEC is having with Kik’s ICO, (a Canadian-based social message company), it is clear evidence that the SEC does indeed have teeth and is looking to pursue those ICOs which have broken US laws. Indeed, the SEC has just fined another company, Nebulous Inc, as it too is claimed to have violated SEC security regulations back in 2014. Interestingly, this shows that the SEC can take years to decide the action it wishes to pursue which is cold comfort for those organisations that carried out ICOs in the past.


Institutions have historically been required to have assets that they manage on behalf of their clients, and which are held independently by a third party, a custodian.

Deloitte summarises that a custodian’s role is “to safeguard assets” and therefore it is only natural, as banks and asset managers look to invest in Cryptocurrencies and Digital assets, that custody services are being sought.

There is a selection of companies offering custody services such as Bitgo, Coinbase, Digital Asset Custody Company, Gemini, itBit, Kingdom Trust and Xapo. However, these companies are largely unknown by many traditional asset managers. Goldman Sachs and Fidelity are now offering custody services too, but what we are beginning to see are new custody service providers with well-known backers. Most importantly, they have the added protection of having the assets that they look after insured.

Anchorage, having received backing from the legendary Silicon Valley investment firm Andreessen Horowitz, has been offering insurance on all assets that it holds as a custodian. Anchorage has used insurance broker Aon to arrange its insurance cover.  Knox, in which Fidelity invested in 2018, is also offering full insurance on any Digital Assets that it provides custody services for. Knox is based in Canada and has arranged its insurance cover via insurance broker Marsh McLennan. Jennifer Hustwitt, a senior vice president at Marsh, recently commented that “Over the past six months, we have seen a net expansion of insurance capacity as the technology continues to mature and regulatory frameworks emerge.”

The provision of fully insured custodian services will prove to be extremely important if more asset managers are to have greater involvement in Digital Assets.



2 Weeks Ago

Thus, as to the benefits of using Blockchain, the jury would appear to be still out.

However, stock exchanges do face a real challenge as Ernst and Young reported the number of companies that are filing to be publicly listed continued to decline in the first two quarters of 2019. Therefore, securities requiring the services of a stock exchange reduces.

The promise of a wave of new tokenised securities or as some call them, digital shares look appealing. According to World Bank statistics, the total value of securities trades in 2018 was $68.2 trillion. The Bank of International Settlement reported that the total value of Over The Counter (OTC) derivatives in 2018 was $544 trillion.

If the derivatives market starts to digitise its assets, enabling them to be traded 24/7 on a digital exchange, the opportunity is enormous. So, with this prize insight, people will continue to see innovation and new technology, like Blockchain, being harnessed, which possibly explains why traditional stock exchanges are embracing Digital Assets. 


Facebook reported, in its Q1 2019 press release, that it now has 2.38 billion monthly users across its various apps - Messenger, WhatsApp, Instagram and Facebook, with 2.4 billion people using one of these apps every day.

This is a rise of 8% over the last year in which Facebook had 1.56 billion logging on every day (Facebook itself is also an increase in the last year of 8%).
As the Chinese Crypto Czar pointed out, “The most a central bank could do to prevent Libra from entering a country would be to ask all of their payment institutions and commercial banks not to process any transactions which are related to Libra. Still, there are a few back channels through which users could circumvent the ban to purchase Libra, look at underground Bitcoin trading in China as an example of how it could work”.
Indeed, look at the success the Americans had when they introduced prohibition in 1920, as by 1925, in New York alone, there were over 100,000 illegal bars. Not only was there a huge loss in revenue from the tax on ‘booze’ not being levied and collected, but there were 1,500 federal agents who had to be paid and who was meant to enforce prohibition. Then, there was all the loss of life and social unrest from gangsters, such as Al Capone, who roamed the streets in the USA. In many ways, we have similarities now as, on a global basis, the fight against drugs is estimated to be costing over $100 billion p.a.
Michael Corleone in The Godfather Part II said, "keep your friends close, keep your enemies closer". Maybe rather than fight Libra, governments need to look, listen and learn.
Christian Legarde (former Managing Director of the International Monetary Fund) said in a speech in Singapore earlier this year, “A new wind is blowing, digitalization. In this new world, we meet anywhere, at any time. The town square is back—virtually, on our smartphones. We exchange information, services, even emojis, instantly, peer to peer, person to person. We float through a world of information, where data is the “new gold”—despite growing concerns over privacy and cyber-security. A world in which millennials are reinventing how our economy works, phone in hand”.
Governments want to own and control Digital Currencies, as opposed to these currencies being the property of a corporation such as Facebook. A consequence is that governments could face a loss of control over their citizens, as potentially there is competition with state-backed currencies like the US$. Digital Currencies offer governments the ability to track spending and collect taxes, as Digital Currencies offer a new set of tools to influence the money supply. This is now even more relevant, especially in the current era of low-interest rates.
As an aside, Facebook’s 1st Quarter results for 2019 display that the tax on earnings rose to 30% since Facebook has included the Federal Trade Commission investigation which it thought could result in a fine of  $3 to $5 billion.
Is this another way for Facebook to say that being fined is part of it doing business, and therefore is treated as a tax on its normal activities? (as either way the government gets the money). Given the state of politics in most...


3 Weeks Ago

Imagine 2019 is 1999  

What do you remember? The dotcom boom perhaps?  https://en.wikipedia.org/wiki/Dot-com_bubble. Technically, the dotcom boom began in 1994 and finished in the year 2000. I was 30 years old in 1994, and 36 in the year 2000.
You may also remember in 1999 several Initial Public Offerings (IPOs) https://www.marketwatch.com/story/ipos-shatter-records-in-1999. A record number (510 companies) launched themselves and their equity on the stock market raised, back then, a staggering $66bn. I wonder where they are all now? This is worth studying, as the dotcom failure rate is close to 99%.
When we jump back to 2019, we see already more than 500 IPOs in the worldwide market:
https://www.ey.com/Publication/vwLUAssets/ey-global-ipo-trends-q2-2019/$FILE/ey-global-ipo-trends-q2-2019.pdf , and record amounts of new capital being raised to back these new platforms and ideas.
So, what is happening here? The news makes us wonder
Is there something familiar happening? Have we seen all this before? Is history repeating itself or, at least, rhyming? None of us knows, but many of us sense that something equivalent to back then (1999) is happening once again. The ‘Power of Weak Signals’:
Dotcom is no longer the phrase of the moment, now that we have AI, Bitcoin, Blockchain, Climate Change, Crypto, Cybersecurity, FinTech and SaaS. Even social media is a passé phrase today. Most of these new buzzwords, few of us understand. Alongside these new ideas, platforms and start-ups we have a new workplace, which many of the millennials hold in their hearts as a place to aspire to work - namely WeWork, itself with more than 500 locations worldwide: https://en.wikipedia.org/wiki/WeWork
But somehow, we know something is wrong at WeWork, which is a property company painted with ‘go-faster’ technology stripes. It’s not a tech company but thinks it is.
WeWork’s valuation has fallen 80% since January and whilst $47bn is way too high, is $10bn too low? The more you study the WeWork S1 filing for its IPO, the more you think something just doesn’t seem right here:
https://www.sec.gov/Archives/edgar/data/1533523/000119312519220499/d781982ds1.htm, and here: https://www.theverge.com/2019/8/15/20806366/we-company-wework-ipo-adam-neumann
So, if we return to 1999, everything was ‘rosy’ with dotcom and everyone was to be a millionaire - compared with 2019 when everyone is to be a billionaire!
Let’s look back then at when the UK market peaked (30th, December 1999) with the FTSE100 reaching 6950 -  https://www.telegraph.co.uk/finance/markets/11432504/FTSE-100-breaks-1999-record-to-hit-all-time-high.html
A number not to be seen again until 2015. Did it take the FTSE100 fifteen years to recover from the dotcom crash? Perhaps.
The FTSE100 is primarily an international index of companies where 75% of income comes from global markets outside the UK. This makes it a good average, a good yardstick to feel where global markets reside. With more than two trillion pounds of market cap it represents a fair share of the £67 trillion global GDP market, at almost 3%:
 So, where does all this leave us with 2020 fast approaching? Is there some kind of tech correction coming? When we examine Bitcoin 2009, is this the equivalent of World Wide Web 1989 by Sir Tim Berners-Lee? Was the Ethereum 2015 ICO like the Netscape IPO 1995?
In 1998, Amazon stock collapsed at 90%: https://www.cnbc.com/2018/12/18/dotcom-bubble-amazon-stock-lost-more-than-90percent-long-term-investors-still-got-rich.html.
In 2018, the so-called Cryptos...