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The Continuing Evolution of Crypto-assets

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The Future of Finance

Abstract

At the time of writing, the crypto-assets ecosystem could be thought to be facing serious headwinds. No longer buoyed by the record-high valuations of 2017, the community faces a growing number of disappointing and abandoned ICO projects and a drop in overall crypto-asset prices. Yet despite these challenges, a growing number of highly established stakeholders, including large financial institutions, large technology firms, and even central banks, are accelerating their experimentation and investments in this field.

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Notes

  1. 1.

    FINMA, “FINMA Publishes ICO Guidelines,” Swiss Financial Market Supervisory Authority FINMA, February 16, 2018, https://www.finma.ch/en/news/2018/02/20180216-mm-ico-wegleitung/.

  2. 2.

    Michael del Castillo, “For Blockchain Startups, Switzerland’s ‘Crypto Valley’ Is No New York,” CoinDesk (blog), October 31, 2016, https://www.coindesk.com/blockchain-innovation-switzerland-crypto-valley-new-york.

  3. 3.

    Paddy Baker, “Gibraltar Stock Exchange Confirms Move into Security Tokens,” Crypto Briefing (blog), July 11, 2018, https://cryptobriefing.com/gibraltar-stock-exchange-security-tokens/; Viren Vaghela and Andrea Tan, “How Malta Became a Hub of the Cryptocurrency World,” Bloomberg News, April 23, 2018, https://www.bloomberg.com/news/articles/2018-04-23/how-malta-became-a-hub-of-the-cryptocurrency-world-quicktake.

  4. 4.

    “SFC Sets out New Regulatory Approach for Virtual Assets,” Securities & Futures Commission of Hong Kong, November 1, 2018, https://www.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=18PR126.

  5. 5.

    “A Guide to Digital Token Offerings” (Monetary Authority of Singapore, November 14, 2017), http://www.mas.gov.sg/~/media/MAS/Regulations%20and%20Financial%20Stability/Regulations%20Guidance%20and%20Licensing/Securities%20Futures%20and%20Fund%20Management/Regulations%20Guidance%20and%20Licensing/Guidelines/A%20Guide%20to%20Digital%20Token%20Offerings%20%2014%20Nov%202017.pdf.

  6. 6.

    Jeff John Roberts, “Only 802 People Told the IRS About Bitcoin, Coinbase Lawsuit Shows,” Fortune, March 19, 2017, http://fortune.com/2017/03/19/irs-bitcoin-lawsuit/.

  7. 7.

    “Notice 2014–21 | IRS Virtual Currency Guidance” (Internal Revenue Service, April 14, 2014), https://www.irs.gov/irb/2014-16_IRB#NOT-2014-21.

  8. 8.

    “Regulation of Virtual Assets,” Financial Action Task Force (FATF), October 19, 2018, http://www.fatf-gafi.org/publications/fatfrecommendations/documents/regulation-virtual-assets.html.

  9. 9.

    Manesh Samtani, “ASIFMA Publishes Best Practices Guide for Crypto Exchanges,” Regulation Asia (blog), June 21, 2018, https://www.regulationasia.com/asifma-publishes-best-practices-guide-for-crypto-exchanges/.

  10. 10.

    “Fintech Association of Hong Kong,” Fintech Association of Hong Kong, accessed January 16, 2019, https://ftahk.org/.

  11. 11.

    “Home,” Global Digital Finance (GDF), accessed January 16, 2019, https://www.gdf.io/.

  12. 12.

    Josiah Wilmoth, “Major Milestone: There Are Now More than 300 Cryptocurrency Funds,” CCN, July 27, 2018, https://www.ccn.com/major-milestone-there-are-now-more-than-300-cryptocurrency-funds/.

  13. 13.

    Jennifer Surane, “Goldman to Add Crypto Contracts Without Trading Bitcoins,” Bloomberg News, May 2, 2018, https://www.bloomberg.com/news/articles/2018-05-02/goldman-is-said-to-add-crypto-contracts-without-trading-bitcoins.

  14. 14.

    Marie Huillet, “Japan: Nomura Bank Announces Crypto Custody Solution For Institutional Investors,” Cointelegraph, May 16, 2018, https://cointelegraph.com/news/japan-nomura-bank-announces-crypto-custody-solution-for-institutional-investors.

  15. 15.

    Kate Rooney, “Fidelity Launches Trade Execution and Custody for Cryptocurrencies,” CNBC, October 15, 2018, https://www.cnbc.com/2018/10/15/fidelity-launches-trade-execution-and-custody-for-cryptocurrencies.html.

  16. 16.

    Ian Allison, “Fidelity Looking to Expand Digital Asset Trading Beyond Bitcoin and Ether,” CoinDesk (blog), November 29, 2018, https://www.coindesk.com/fidelity-looking-to-expand-digital-asset-trading-beyond-bitcoin-and-ether.

  17. 17.

    Benjamin Bain, “Winklevoss-Backed Bid for Bitcoin-ETF Rejected by Regulators,” Bloomberg News, July 26, 2018, https://www.bloomberg.com/news/articles/2018-07-26/sec-rejects-winklevoss-twins-request-to-launch-bitcoin-etf.

  18. 18.

    Annaliese Milano, “E-Commerce Giant Rakuten Is Launching Its Own Crypto,” CoinDesk (blog), February 27, 2018, https://www.coindesk.com/e-commerce-giant-rakuten-launching-cryptocurrency.

  19. 19.

    Wolfie Zhao, “Rakuten Is About to Buy a Bitcoin Exchange for $2.4 Million,” CoinDesk (blog), August 31, 2018, https://www.coindesk.com/rakuten-seeks-to-acquire-bitcoin-exchange-in-2-4-million-deal.

  20. 20.

    Wolfie Zhao, “Messaging Giant LINE Is Launching Its Own Cryptocurrency,” CoinDesk (blog), August 31, 2018, https://www.coindesk.com/messaging-giant-line-is-launching-its-own-cryptocurrency.

  21. 21.

    Jon Russell and Mike Butcher, “Telegram’s Billion-Dollar ICO Has Become a Mess,” TechCrunch (blog), accessed January 16, 2019, http://social.techcrunch.com/2018/05/03/telegrams-billion-dollar-ico-has-become-a-mess/.

  22. 22.

    Sarah Frier and Julie Verhage, “Facebook Is Developing a Cryptocurrency for WhatsApp Transfers, Sources Say,” Bloomberg News, December 21, 2018, https://www.bloomberg.com/news/articles/2018-12-21/facebook-is-said-to-develop-stablecoin-for-whatsapp-transfers.

  23. 23.

    Andrew Beattie, “The History Of Money: From Barter To Banknotes,” Investopedia, December 29, 2015, https://www.investopedia.com/articles/07/roots_of_money.asp.

  24. 24.

    Ben Bohane, “Yap: Island of Stone Money, Micronesian Song and Just a Trickle of Tourists,” ABC News, March 30, 2016, https://www.abc.net.au/news/2016-03-30/yap-balances-traditional-micronesian-values-with-tourism-push/7285664.

  25. 25.

    Mike Brown, “Should Amazon Get Into Virtual Currency & Other Products?,” LendEDU (blog), February 27, 2018, https://lendedu.com/blog/amazon-virtual-currency-banking-insurance/.

  26. 26.

    Morten Linnemann Bech and Rodney Garratt, “Central Bank Cryptocurrencies,” BIS Quarterly Review, September 17, 2017, https://www.bis.org/publ/qtrpdf/r_qt1709f.htm.

  27. 27.

    JP Koning, “Fedcoin: A Central Bank-Issued Cryptocurrency” (R3, November 15, 2016), https://static1.squarespace.com/static/55f73743e4b051cfcc0b02cf/t/58c7f80c2e69cf24220d335e/1489500174018/R3+Report-+Fedcoin.pdf.

  28. 28.

    Aleksander Berentsen and Fabian Schar, “The Case for Central Bank Electronic Money and the Non-Case for Central Bank Cryptocurrencies,” Federal Reserve Bank of St. Louis Second Quarter 2018, Vol. 100, No. 2 (February 28, 2018), https://doi.org/10.20955/r.2018.97-106.

  29. 29.

    Morten Linnemann Bech and Rodney Garratt, “Central Bank Cryptocurrencies,” BIS Quarterly Review, September 17, 2017, https://www.bis.org/publ/qtrpdf/r_qt1709f.htm, page 64.

  30. 30.

    Central Bank Cryptocurrencies.

  31. 31.

    Ibid.

  32. 32.

    S. Mohammad Davoodalhosseini, “Central Bank Digital Currency and Monetary Policy” (Funds Management and Banking Department, Bank of Canada, July 2018), https://www.bankofcanada.ca/wp-content/uploads/2018/07/swp2018-36.pdf, page 9.

  33. 33.

    Katia Moskvitch, “Inside the Bluster and Lies of Petro, Venezuela’s Cryptocurrency Scam,” Wired UK, August 22, 2018, https://www.wired.co.uk/article/venezuela-petro-cryptocurrency-bolivar-scam.

  34. 34.

    “Digital Currencies,” Bank of England, December 3, 2018, http://www.bankofengland.co.uk/research/digital-currencies.

  35. 35.

    “China’s Plan to Sideline Bitcoin,” Bloomberg News, December 13, 2018, https://www.bloomberg.com/news/articles/2018-12-13/china-s-plan-to-sideline-bitcoin.

  36. 36.

    Wolfie Zhao, “PBoC’s Yao: Chinese Digital Currency Should Be Crypto-Inspired,” CoinDesk (blog), March 7, 2018, https://www.coindesk.com/pbocs-yao-qian-state-digital-currency-can-still-be-cryptocurrency.

  37. 37.

    Christine Lagarde, “Winds of Change: The Case for New Digital Currency,” (November 14, 2018), https://www.imf.org/en/News/Articles/2018/11/13/sp111418-winds-of-change-the-case-for-new-digital-currency.

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Arslanian, H., Fischer, F. (2019). The Continuing Evolution of Crypto-assets. In: The Future of Finance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-14533-0_17

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