It was yet another subdued week for the cryptocurrency complex, with markets continuing their downward trajectory early in the week, following the $40 million hack of Korean exchange Coinrail on June 10th. By Thursday, total market cap had hit $267 million – a 2-month low – before recovering modestly towards the end of the week.

EOS Mainnet

It was a particularly momentous week for EOS, which saw its Mainnet go live – only for it to ‘freeze’ less than 48 hours after launching, according to a post from the platform’s top 21 block producers. The pause lasted for 5 hours, during which time the blockchain completely ceased functioning. An EOS Telegram channel reported that following the ‘pause’, the block producers and standby nodes discussed and then fixed the issue, with reports emerging that the Mainnet was live again around five hours later.

Although the issue seems to have been resolved, it has generated much debate among both the EOS and wider cryptocurrency communities. Clearly having 5 hours of downtime soon after launching is not ideal, especially with potentially thousands of transactions having to be delayed. Not to mention the 2-week delay that transpired prior to the launch itself which prompted speculation over whether enough had been done by the team to ensure the Mainnet was bug-free. Nevertheless, it is still early days, and should the team now be on top of these problems, then a serious contender to the Ethereum platform is now up and running.

SEC Ruling on Bitcoin and Ether

On the regulatory front, the biggest news of the week came from the U.S. Securities and Exchange Commission (SEC), when the director of its corporate finance division William Hinman declared that neither Bitcoin nor Ether can be classified as “securities”. As such, they won’t be regulated under US Securities Law. According to Hinman himself, “Based on my understanding of the present state of ether, the Ethereum network, and its decentralized structure, we believe that current offer and the sales of ETH are not securities transactions.” He did not, however, make assertions pertaining to any other cryptocurrency.

The issue has been hotly debated for some time, especially since the SEC began looking into ICO regulation in greater depth last year following the hack of The DAO, whose token sale was staged on the Ethereum platform. But it seems as though the watchdog will treat the two leading cryptocurrencies more like commodities such as gold and oil. At the same time, Hinman advised that the analysis of whether something is a security “is not static and does not strictly inherent to the instrument.” He also made clear that even if a token is classed under the ‘utility’ category and functions solely as a means of exchange in a decentralized network, it could still “be packaged and sold as an investment strategy that can be a security.” This suggests that token classification will remain a dynamic process throughout a token’s existence.

Ripple Funding University of Texas

As part of its $50 million pledge to invest in blockchain research via more than 15 universities around the world, Ripple last week promised to provide The University of Texas in Austin with $2 million of funding to be disbursed over the next five years. The funding will primarily be directed towards the university’s McCombs School of Business in support of its Blockchain Research Initiative, although how the funds will be specifically apportioned is yet to be ascertained.

According to Cesare Fracassi, an associate professor of finance who is in charge of the blockchain initiative, “Not only the business school but other branches will be able to participate as well. For example, the medical school expressed interest in blockchain research.” The Initiative’s website, meanwhile, states that its purpose is to support faculty and graduate students research on blockchain,” and “teach students the main concepts related to blockchain, cryptocurrency, and digital payments.” The initiative also intends to facilitate relations with industry and media organizations.

Russia’s Government-Sponsered Blockchain Project

Blockchain Weekly

Russia’s central bank has joined forces with the Russian Association of Corporate Treasurers (RACT) to begin testing on a government-sponsored blockchain project. Called Masterchain, the project will enhance communication with Russia’s banking system, according to its white paper. It may also end up replacing the SWIFT payment system currently in place in the country, something the government has been seeking to do since US and EU sanctions were imposed on Russia in 2014.

The news follows previous pronouncements by central bank first deputy governor Olga Skorobogatova that the bank was discussing the creation of new technologies “for transmitting messages and payments across the Eurasian Economic Union (EAEU) as a supranational infrastructure,” and that a new system would enable the bank to use distributed ledger technology “within the EAEU’s space, settle payments and transmit financial information sidestepping current payment systems.” The new system will also purportedly include market regulatory bodies, as well enable banks to share consumer credit histories and potential fraud information without violating bank secrecy laws.

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Justin Chan
Dr Chan founded (DDI) and is the CEO for JCube Capital Partners. Specialized in strategy development, alternative data analytics and behavioral finance, Dr Chan also has extensive experience in investment management and financial services industries. Prior to forming JCube and DDI, Dr Chan served in the capacity of strategy development in multiple hedge funds, fintech companies, and also served as a senior quantitative strategist at GMO. A published author at professional journals in finance, Dr. Chan holds a Ph.D. degree in finance from UCLA.


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