BitDigest April 17 · Issue #639

• Bitcoin (BTC) and ether (ETH) end week on high note with crypto marketcap at $200 billion
• Congress reintroduces digital dollar to facilitate payment of additional COVID-19 assistance payments
• Libra revises white paper introducing individual currency linked stablecoins and improved compliance framework

Still No Coverage on China

I wrote about my thoughts on the lack of news reports on the issuance of the Chinese DCEP yesterday so I won’t repeat myself, but there is still no media coverage on this monumental subject. Quoting the headline from this week’s Economist, “Is China Winning?”

Will US Crypto Companies Receive Government Assistance

I have spent a considerable amount of time during my work from home hiatus trying to assist our portfolio companies. In late March, these discussions turned to efforts to assist companies to receive money from the Small Business Association (SBA). We originally believed small companies (limited to less than 500 employees) could benefit from the Economic Injury Disaster Loan (EIDL) program, an SBA program that would lend up to $2 million at 4% over 30 years, or the Payroll Protection Program (PPP or “7a”) a program established to offer forgivable loans based on 2.5 times a company’s average monthly payroll – the loans are forgivable if the employee payroll figures remain constant in late June. At a time business was coming to a halt, these programs were viewed as a needed life line.

Unfortunately a month later, we have learned that the EIDL program has been capped at $15,000 per company and although $349 billion was allocated to the PPP, I do not know of a single company in the digital currency and blockchain business that has received any funds among the 100+ companies we are either invested in directly or through our portfolio companies. Today I am concerned because although most of these company have filed the necessary paperwork and many of them have been told they have been approved, 100% of the $349 billion has been allocated (approximately 2 million loans) and none of the companies I am watching has received a single dollar.

There is definitely a lesson learned in this experience. Most of the start-ups and early stage companies we invested in received their funding from VCs and private investors, not a local bank or credit union. When the time came for them to apply for the PPP loans they needed an approved SBA firm to process the application. We worked with our crypto partners to identify additional funding sources, but this delay may have been costly. Since they lacked an approved financial partner, they were unable to be the first in line and were not prioritized by the firms they were able to file through. Latest SBA statistics show there are 27.9 million small businesses; ≈2 million approved loans (7%) is not enough. We are still working to help our portfolio companies and rumors from Washington are that the amount of this program will be increased, but in the future we need to make sure all of our portfolio companies work to develop a banking relationship – as I was reminded this week, its better to fix your roof when its sunny than when its raining.

Bringing US Blockchain Trade Associations Together

The US digital currency and blockchain industry needs to have one voice spreading the crypto gospel. Today this is more important than ever. Unfortunately, there are too many organizations competing for time with congressional lawmakers and regulators.

Whether it’s the Chamber of Digital Commerce,Blockchain Association, Digital Dollar Project, The American Blockchain and Cryptocurrency Association, etc.. I have found they all touch on similar objectives but are doing things on their own without adequate discussion amongst their peers.

There was no better example of this competitiveness than during last summer’s biannual Congressional Fly-in and Education Day hosted by the Chamber of Digital Commerce. The Global Blockchain Business Council decided to hold their own congressional education summit the same day as the Chamber’s event.

I realize that these organizations represent the desires of their largest supporters, but as an industry everyone need to come together with one voice and message on the Hill and there is no better time than now to do this than now. The US needs to respond to the Chinese national blockchain and DCEP and the coffers of many different supporting members are shrinking as companies look to reduce their expenses. Let’s combine these dollars and focus on spreading the same message.

Next Chapter in Wright – Kleiman Case Coming

Today is the deadline for Craig Wright to provide the court documents proving he has access to the bitcoin in the so-called Tulip Trust. I highly doubt Wright will provide what the judge requested. What happens next?

The Headlines

New COVID-19 Assistance Package Brings Back Idea of Digital Dollar

www.tlaib.house.gov

Representative Rashida Tlaib (D-MI) has introduced a new bill (the “Automatic Boost to Communities Act”) looking to provide assistance payments to Americans of $2,000 per month. Tlaib proposes these payments be made through the introduction of Federal Reserve created “FedAccounts” and Treasury-administered digital dollar wallets. If approved, the bill states that the Treasury Secretary will have to comply with offering all recipients of the new $2,000 payments “the option to receive their payments in digital dollar wallets” by January 1, 2021.

Libra Reissues Whitepaper

www.libra.org

Ten months after releasing its original whitepaper, the Libra Association has released an updated report that I can only assume is meant to appease global regulators. Libra announced that it will no longer focus on its multi-currency basket but will also offer single-currency stable coins. In addition, the Libra Association will enhance the safety of its payment system with a robust compliance framework, build greater protection into the design of the Libra Reserve, and forgo its future transition to a permissionless system while maintaining its key economic properties.

House Finance Committee Believes Reissued Libra Did Not Address Bipartisan Concerns

www.sylviagarcia.house.gov

Although Libra announced actions that addressed regulator’s publicly stated concerns, US Congresswoman Representative Sylvia Garcia (D-TX) “and member[s] of the House Financial Services Committee” still intend to fight the private-backed stablecoin and make sure it is considered to be a security. “Facebook and the Libra Association have issued a second white paper that retains a Libra coin backed by a basket of assets,” she explained, adding “unfortunately they chose not to listen to the bipartisan concerns raised about Libra. I will continue to work to make sure that the SEC regulates any such asset as the security that it is under current securities laws.”

Singapore Blockchain Bodies Merge to Form New Association

www.businesstimes.com.sg

Two Singaporean trade groups, the Singapore Blockchain Association (SBA) and the Blockchain, Enterprise and Scalable Technologies (BEST) have merged together to form a new blockchain industry group called the Blockchain Association Singapore (BAS). The BAS announced its merger will add more value to industry and widen reach in fostering collaborations.

BitGo Acquires Lumina and Introduces Improved Portfolio Management and Tax Tools

www.blog.bitgo.com

Digital asset trust company Bitgo announced its acquisition of Lumina, a tax and accounting software company. Through this acquisition, the company is introducing the next generation wallet platform with BitGo Portfolio & BitGo Tax. BitGo Portfolio is a single, consolidated dashboard for users to view their entire digital asset holdings and activity (regardless of where those assets are stored or transacted). BitGo Tax is an institutional-grade tax solution fully integrated into BitGo Portfolio.

Ant Financial Introduces SME Focused Blockchain

www.businesswire.com

Alibaba’s Ant Financial has launched OpenChain, a blockchain platform focusing on small and micro enterprises (SMEs). “Through the launch of the OpenChain platform, we aim to help one million SMEs and developers innovate and explore more use cases in the next three years,“ the company said.

Amazon Bitcoin Facilitator, Purse.io to Shut Down

www.support.purse.io

Purse.io an application which worked to spread the adoption of bitcoin by allowing individuals to use bitcoin to purchase items on Amazon.com at a discount, has announced it is ceasing operations and will dissolve the company.

Market Data

Grayscale Releases Q1 Investment Report

www.grayscale.co

Grayscale Investments released the Q1 investment summary report and raised an astonishing $503 million over the January to March period and a total of $1.07 billion in calendar 2019. I had two major takeaways from the report: Grayscale now holds 1.7% of all bitcoin (BTC) in circulation, and investors in other Grayscale products principally invested their dollars in the Ethereum Trust which gained $114 million (22% of total inflows) during the quarter.

Exchange, Custody and Product News

Discover all the ways you can earn crypto in one place

www.blog.coinbase.com

Coinbase has introduced a rewards section in the Coinbase mobile app highlighting how users can earn crypto by learning about different assets and how they can earn rewards when holding eligible crypto. This really is free money and worth a look. Coinbase Custody announced it is launching support for Compound Governance making it the only custody provider to offer in-app voting experience for the DeFi protocol.

Binance Introduces Parallel Smart Contracts Blockchain and Venezuelan Bolivar P2P Trading

www.binance.com

Binance has introduced a new blockchain to run in parallel with the current Binance Chain called Binance Smart Chain, The objective of the new “Smart Chain” will be to support an intuitive version of smart contract and bring the interoperability and programmability of the Ethereum Virtual Machine (EVM) to Binance Chain. Binance Latin America is offering peer-to-peer trading for Venezuelan bolivars (VEF).

Anchorage to Offer Custody and Staking for Celo

www.medium.com

Crypto custodian Anchorage announced will begin to offer custody and staking for stablecoin Celo Gold (cGLD).