“Either bitcoin will work, and become a trillion-dollar asset, or it won't and it will go to zero. We're reaching that point where it will be very binary." — Jack Maller, Lightning developer
The Big Block
Traditional financial institutions do a tremendous amount of business as “custodians,” holding customers’ assets to protect them against theft or less. In the second quarter of 2018, four of the largest custody banks held a whopping $114 trillion worth of assets under custody and administration. Custodial solutions are important for financial markets: Instead of firms spending time and resources to manage assets, they pay someone to take on that role — leaving more time for firms to operate in their areas of expertise.
For investment advisors, custody is required by law. The Rules And Regulations, Investment Advisers Act Of 1940 requires that any registered investment advisor who has custody over clients assets must have those assets stored with qualified custodians.
With the arrival of bitcoin and cryptoassets, custody takes on a whole new level of importance. Cryptoassets are essentially digital bearer bonds. Instead of cryptoassets being registered under an owner’s name, their ownership is intrinsically linked to a string of alphanumerics known as private keys. Control of those private keys means full access to transfer their associated cryptoassets — so safeguarding them is especially critical. And similar how bearer bonds work, the owner of a private key is the de facto owner of the underlying asset.
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Around The Block
Adam White, one of Coinbase’s earliest employees, leaves the company
White was Coinbase’s fifth employee and led the company’s institutional businesses which include GDAX, Coinbase’s institutional trading platform. In a statement, Coinbase representatives said the company was “extremely sad to see him go, we’re also confident in that group’s ability to keep executing on the vision that he laid out to be the most trusted venue for institutional investors to trade cryptocurrencies.”
The ICE has it? Gov’t official discusses efforts to track cryptocurrencies and combat drug trade
At a hearing of the U.S. Senate Caucus on International Narcotics Control, Matthew Allen of Homeland Security discussed how the government can catch criminals who use cryptocurrencies to move money. While the hearing was focused on combating the illegal fentanyl trade, Allen made some intriguing remarks about cryptocurrency, particularly with respect to secrecy, anonymity, and the privacy of transactions. — More
IBM designs a hybrid blockchain architecture for IoT
Two hot technologies are coming together if IBM has its way. The research division’s new paper: Hybrid-IoT: Hybrid Blockchain Architecture for Internet of Things – PoW Sub-blockchains explores a new architecture for the internet of things, in which IoT gets a boost from blockchain tech. The decentralization of IoT would improve many of the current issues with centralized IoT infrastructures including high maintenance costs, low interoperability, and single points of failure. The IBM team took developed an approach that led to optimal clusters of distributed IoT devices based on performance considerations. Devices in those clusters would have their own “sub-blockchain,” which keeps track of everything in the group. — More
Air France — KLM look to eliminate middlemen with blockchain — More
Abra to launch token tied to crypto index fund — More
Federal court upholds CFTC’s right to prosecute fraud involving virtual currency — More
Over 1,600 cryptocurrency ATMs are coming to Argentina — More
One of Korea’s largest cryptocurrency exchange plans to launch a decentralized exchange — More