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SEC Commissioner Hester Peirce on Why You Shouldn’t Have to Be Rich to Get Rich

SEC Commissioner Hester Peirce on Why You Shouldn’t Have to Be Rich to Get Rich

We also extensively covered initial coin offerings, in particular what will happen to the hundreds of ICO issuers that had initial coin offerings that look much like the ICOs that have already had enforcement actions against them, such as Munchee, Paragon and Airfox. Though things only trickle up to the commissioner level in certain instances, so she wasn’t sure about what enforcement actions might be in the pipeline, she did urge any ICO issuers who think they fall in this category to self-report to the SEC, as Gladius did.

Other topics we discussed include forthcoming SEC guidance for the crypto space, the Token Taxonomy Act and why she thinks the accredited investor requirement is “saying, wait a minute, you’re telling me I have to be rich in order to get rich?”

In discussing how the SEC would regulate decentralized exchanges. Cmr. Peirce urged people creating such software to come talk to the SEC. However, she said, “I don’t want someone who’s written code to worry that she’s going to be blamed for something that someone else did with her code. I don’t want to outlaw writing code.”

In response to the first pre-submitted question from the audience about whether or not U.S. financial regulators have so far been too zealous in regulating the crypto space (the questioner here stated the “ZERO legit projects” are based in New York specifically because of the New York Bitlicense), Cmr. Peirce responded, “generally, people who are in the regulatory community are sort of dismissive of the space in a way that misses that point, which is … there’s real potential for us to change the way people interact with each other across the globe and to bring more people into our economy which is good for all of us as we draw in talent from more and more places into this area of crypto…. We also have to think about, are we preventing people from doing things that are beneficial for society were it not for our regulatory system?”

To find out how she agrees with Changpeng Zhao, the CEO of Binance, a company famous for its regulatory arbitrage strategy, listen to the episode on Unchained.

Unchained is available on Apple Podcasts, Google Play, iHeart, Overcast, Pandora, Player.fm, Soundcloud, Spotify, Stitcher, TuneIn, and many other platforms.

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These are the show notes for a fireside chat I moderated with SEC Commissioner Hester Peirce held by the Blockchain Digital Asset Forum, in conjunction with the NYU Stern Executive MBA program, on March 26, 2019, and released on the Unchained podcast. Listen to the episode on Unchainedpodcast.com, as well as on Apple Podcasts, Google Play, iHeart, Overcast, Pandora, Player.fm, Soundcloud, Spotify, Stitcher, TuneIn, and many other platforms.

“Crypto Mom” certainly delivered on her reputation.

In a fireside chat that I moderated, Cmr. Peirce (pronounced “purse”) was as candid as one would expect a federal regulator to be. “A lot of resources are expended in just trying to figure out how you can be compliant with our rules,” she said. Referring to reports that software developers do work-arounds to not run afoul of U.S. financial regulators specifically she said, “I hear that and I think, Wow, it’s sad to me that those resources can’t be spent in a more productive way. … It also makes me want to say, come talk to us, tell us where the pain points are and tell us what we could change so you wouldn’t have to engage in effort that ultimately you don’t think is serving investors.”

She described the source of her seeming support or at least open attitude to the crypto industry, especially compared to the other SEC commissioners. “I really identify with some of what’s driving people in this space, which is a desire to look at the world with fresh eyes and say, are there things we can do things better?” she said.

Mentioning that her area of influence is in the regulatory sphere, she said, “When I came to the SEC, one of the things I hoped to work on was, in general, the agency has not been great on innovation, so this was a natural area for me to be looking at.”

In discussing her well-known dissent to the SEC’s decision not to approve the Winklevoss Bitcoin ETF, which is where much of her reputation as “Crypto Mom” came from, she explained why she disagreed with the decision. Part of it stemmed from her belief that it was based on concerns about the underlying markets, which is beyond the SEC’s purview. Plus, she added, “I did think there was a whiff of merit regulation in this, which was essentially us saying, we don’t think this product will be good for investors. I don’t know whether that particular product or another exchange-traded product based on cryptocurrency will be good investors but I think investors can make that decision better than I can.”

Our interview also unpacked some of the mysteries of how the agency works. She described the process that occurs when something like an application for a Bitcoin ETF is submitted to the SEC, whether or not there’s a lot of disagreement amongst the commissioners about how to regulate crypto, how much they work to persuade each other to come over to their side and whether Chairman Jay Clayton’s opinion overrules everyone else’s or whether majority rules.

We also extensively covered initial coin offerings, in particular what will happen to the hundreds of ICO issuers that had initial coin offerings that look much like the ICOs that have already had enforcement actions against them, such as Munchee, Paragon and Airfox. Though things only trickle up to the commissioner level in certain instances, so she wasn’t sure about what enforcement actions might be in the pipeline, she did urge any ICO issuers who think they fall in this category to self-report to the SEC, as Gladius did.

Other topics we discussed include forthcoming SEC guidance for the crypto space, the Token Taxonomy Act and why she thinks the accredited investor requirement is “saying, wait a minute, you’re telling me I have to be rich in order to get rich?”

In discussing how the SEC would regulate decentralized exchanges. Cmr. Peirce urged people creating such software to come talk to the SEC. However, she said, “I don’t want someone who’s written code to worry that she’s going to be blamed for something that someone else did with her code. I don’t want to outlaw writing code.”

In response to the first pre-submitted question from the audience about whether or not U.S. financial regulators have so far been too zealous in regulating the crypto space (the questioner here stated the “ZERO legit projects” are based in New York specifically because of the New York Bitlicense), Cmr. Peirce responded, “generally, people who are in the regulatory community are sort of dismissive of the space in a way that misses that point, which is … there’s real potential for us to change the way people interact with each other across the globe and to bring more people into our economy which is good for all of us as we draw in talent from more and more places into this area of crypto…. We also have to think about, are we preventing people from doing things that are beneficial for society were it not for our regulatory system?”

To find out how she agrees with Changpeng Zhao, the CEO of Binance, a company famous for its regulatory arbitrage strategy, listen to the episode on Unchained.

Unchained is available on Apple Podcasts, Google Play, iHeart, Overcast, Pandora, Player.fm, Soundcloud, Spotify, Stitcher, TuneIn, and many other platforms.

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Cryptocurrency

Hackers made $32K in 7 weeks by fixing bugs in cryptocurrency projects

Hackers made $32K in 7 weeks by fixing bugs in cryptocurrency projects

In the past seven weeks, white hat hackers earned at least $32,150 by fixing security flaws in popular cryptocurrency and blockchain platforms like TRON, Brave, EOS and Coinbase.
According to data reviewed by Hard Fork, 15 blockchain-related firms have paid rewards to security researchers between March 28 and May 16, split across 30 publicly-released bug reports.

Omise, the software firm behind cryptocurrency OmiseGo, fielded the most fixes (six). Blockchain-powered prediction market Augur disclosed three reports, as did Brave Software, makers of the Brave browser, which features its own native token.

Projects adjust their HackerOne rewards to the severity the discovered security flaws. Whilst the majority of Omise’s reports were only worth around $100 each, other payments in the past seven weeks were much higher.
Block.one, the firm behind the EOS “blockchain,” rewarded one hacker with $10,000 for a single fix, as did budding network Aeternity.
TRON also paid $3,100 to the researcher who realized the network was susceptible to being flooded with malicious smart contracts, which would have brought its blockchain to a screeching halt.
The amount of hackers who prefer to fix security issues seems to be remaining steady — but sometimes they can make off with much bigger amounts exploiting vulnerabilities themselves.
Indeed, cryptocurrency exchange Binance revealed attackers had successfully stolen 7,000 BTC (then $40 million, now $55 million) from its own wallets last week.
Coincidentally, Binance runs its own bug bounty program with a maximum reward of $100,000 for the most critical of vulnerabilities. The Binance hacker remains at large.

Published May 20, 2019 — 15:21 UTC

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Cryptocurrency

ABN AMRO signs on Accenture and ING Bank for its blockchain inventory platform

ABN AMRO signs on Accenture and ING Bank for its blockchain inventory platform

Despite abandoning plans to build its own Bitcoin wallet, ABN AMRO is not quite done with blockchain tech.
The Dutch banking giant has announced plans to launch a decentralized trade inventory platform in collaboration with Accenture and ING Bank, according to a press release (spotted by CoinDesk).

Codenamed Forcefield, the project will employ Internet-of-Things (IoT) devices to provide “real-time insight into trade inventories.” ABN AMRO claims the platform’s monitoring features “will lead to more secure physical handling processes and a reduction of costs.”
Upon launch, the project will focus on “refined metals,” but “functionality will be expanded across other dry bulk commodities” in the future.
In addition to ING and Accenture, a number of other companies – including Anglo American, CMST International, Hartree Partners, Macquarie, Mercuria, and OCBC Bank – have also signed a memorandum of understanding to join Forcefield.
Back in January, ABN AMRO teased plans to develop its own cryptocurrency wallet, called Wallie. But as Hard Fork reported, the bank has now ditched Wallie as cryptocurrencies are still “too risky.”
“We have approached all the people who have shown interest,” ABN AMRO press officer Jarco de Swart told Hard Fork. “We have concluded that cryptocurrencies because of their unregulated nature are at the moment too risky assets [sic] for our clients to invest in.”
ABN AMRO and ING are hardly the only banks looking to get in on the blockchain hype. Indeed, leading banks – including Barclays and HSBC – reportedly poured $50 million into a blockchain-based digital cash system, expected to launch in 2020.

Published May 20, 2019 — 15:00 UTC

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