Blockchain Confidential - 18 February 2022

Jamie Dimon rocks it in the unreal world, Charlie Munger still hates crypto, and Colorado will accept Bitcoin for state taxes

The Week

BlockFi moved to register its product with the SEC after getting hit with a $100M fine for offering an unregistered security; they will also discontinue their high-yield investment accounts for U.S. customers. DARMA Capital kept its head down by going through the CFTC for its novel Filecoin swap product. Coinbase’s Superbowl promotion was so popular the traffic triggered an outage. We have written about Cosmos and its IBC protocol previously, and this week saw a big upgrade with Interchain Accounts being added to the protocol. When it wasn’t busy building a Jamie Dimon portrait in the metaverse, JP Morgan has been doing more serious research work into quantum-resistant blockchains.

Last week it was your luxury SUV that came with an NFT; this week it’s your pre-ordered Samsung phone. Propy sold its first property tied to an NFT, in Florida, but until the regulations recognize such transfers properly it is more a way to record transfer rather than a native blockchain transfer of ownership. Cere Network, a DeCloud platform, announced launch of a media layer called DaVinci which aims to provide secure storage of NFT media assets on top of their decentralized network.

Finally, we always have time for Charlie Munger, even if he does not have time for crypto. Next up: Charlie Munger arguing with an empty chair representing DeFi.

The Good Read

The quants over at Gauntlet wrote at length on how they model VaR in DeFi protocols like Aave, a topic close to our hearts. Read VaR Deepdive.

Regulator Radar

New Hampshire established a commission to study legal changes to encourage crypto innovation in the state, while Colorado plans to accept Bitcoin for state taxes. For those who argue that one of the ways fiat obtains value comes from the requirement to have it to pay taxes, this is one to ponder. The Treasury Department touted the value of banking charters for stablecoins in front of a Senate committee in the face of a lot of skepticism about its proposals. At a recent retreat hosted by Congressional Democrats, SEC Chair Gensler once again affirmed his view that most digital assets are securities, which makes you wonder about everyone calling for regulatory clarity on the matter; he has been pretty consistent on this point. And the U.S. Treasury reiterated that it does not consider staking & mining business or individual developers to be brokers, at least not for the purpose of tax reporting.

In news that surprises exactly nobody, the IMF chief believes CBDC’s are the future for all digital assets, while the Financial Stability Board joined a chorus of multinational bodies and national regulators expressing concerns about crypto as a vector for systemic risk. India’s RBI seems to be dialing back its concerns, stating it is in line with the government’s plans to regulate and tax cryptocurrencies. Jamaica joined the long list of countries announcing CBDC plans and pilots, with a launch planned for later this year, while Ukraine put forward a regulatory framework to help bring crypto trading out of the shadows.

At the Office

This week we did multiple sneak preview demos of the Serenity digital asset portfolio management platform — aiming to gather feedback on our initial direction and to also get in the door at more digital asset hedge funds, prop trading firms and asset managers and understand their biggest risk problems. We took the show on the road with Barry, Bob and myself heading to a hedge fund in midtown with our laptops, a welcome break from near-100% fully remote work. In engineering we are piloting the latest iteration of our “Inception” development environment, a novel Docker-in-Docker cloud development environment for quants & developers. Inception lets us move very fast and maintain fine-grained control over how much we break as we storm ahead. On the product side we pulled together our first big roadmap, and for sales we are about to transition to Pipedrive’s CRM to track our deal pipeline.