Rep. Tyler Lindholm is a rancher in Sundance, Wyoming, and a Republican member of the Wyoming House of Representatives
. Caitlin Long, a Wyoming native, is former chairman and president of Symbiont and a former managing director of Morgan Stanley.

Wyoming is stepping up to welcome the blockchain community with open arms.

A grassroots group, the Wyoming Blockchain Coalition, has garnered significant momentum to pass a package of legislation that would bring significant benefits to both the blockchain community and the State of Wyoming.

The package of blockchain bills, which will be introduced during the upcoming session in February, will build on two characteristics of Wyoming that make it particularly attractive to the blockchain industry: zero corporate income or franchise taxes, and strict privacy laws governing LLCs formed in the state.

Companies don’t need to move to Wyoming physically to take advantage, just as most Delaware corporations aren’t located in Delaware. But but there are real reasons why businesses might want to move there. Cheyenne, the state capital, has tremendous fiber-optic bandwidth and cheap power that is already attracting major data centers to locate there, for example.

And our initiative has active support by officials at the state’s only university. So Wyoming has “good bones” upon which to build a regulatory framework to attract the blockchain sector.

Licensing exemptions

The blockchain community is likely to be most excited by one of the bills just introduced, H.B.0070, which would exempt tokens issued on an open blockchain from Wyoming’s money transmitter and securities laws, as long as the token has not been marketed as an investment and is exchangeable for goods or services. This bill would also exempt token exchanges (or people exchanging tokens) from being deemed broker/dealers under Wyoming law. The bill has garnered senior co-sponsors, including the Speaker of the House.

As always, whether a token would be considered, under Wyoming law, either a security or exempt pursuant to the new legislation, would be a facts-and-circumstances analysis. Businesses should seek their own legal counsel.

We view non-securities blockchain tokens as a new asset class that is neither money nor securities, and therefore believe existing money transmitter and securities regulations should not apply.

In many cases, for example, such blockchain tokens are simply prepaid software licenses. If tradeable gift cards and prepaid cell phone minutes are not regulated as money or securities, why should prepaid software licenses fall into those categories?

In many states, they do. In Wyoming, they should not, and we are optimistic that the legislature will agree.

Wyoming’s consumers will be protected by its strong anti-fraud and consumer protection laws, which we believe are sufficient to deter bad actors from doing business in the state. And businesses should analyze whether federal securities laws would still apply.

Other measures

The Wyoming Blockchain Coalition also supports two other bills as part of the package for the February session.

The so-called „bitcoin bill,“ H.B.0019, proposes to exempt virtual currencies from Wyoming’s money transmitter laws. Alone, this legislation will allow businesses that pulled out of Wyoming in 2015, such as Coinbase, to operate in Wyoming. This will add a vital new industry to the State’s financial sector. It, too, has garnered many co-sponsors, including the President of the Senate.

The third bill, the so-called „filings bill,“ would enable the Secretary of State to collect registrations on a blockchain, similar to that enacted by the State of Delaware last July. It would cover the filings made for corporations, LLCs and UCC financing statements. The goal of this legislation is to allow the official record of ownership and the official record of changes of ownership to exist on a blockchain. Eventually this will allow the State, counties, municipalities and businesses to eliminate paper trails such as deeds, titles and receipts.

LLC City

Wyoming led the way when it passed the nation’s first LLC law in 1977, and it can again be first by offering the ability to register LLCs on a blockchain. This could attract meaningful business to register in Wyoming, as academic research shows that nearly two-thirds of new companies that register in the U.S. are LLCs.

New types of LLC users, such as those seeking to limit liability for autonomous cars and other internet of things (IoT) devices, could be attracted to efficiencies enabled by blockchain-registered Wyoming LLCs. This is especially true for series LLCs, which is another initiative supported by the Wyoming Blockchain Coalition.

LLCs are so popular in Wyoming today that there is almost one for every two citizens of the state.

Wyoming can become a haven for the blockchain sector, building on its already-attractive attributes, if the package of blockchain bills are enacted. The bills provide tremendous benefits for blockchain businesses that either locate or register in Wyoming, as well as significant upside to the State. We welcome the blockchain community’s support in bringing these efforts to fruition.

As we say in Wyoming, let ‚er buck!

The authors wish to thank David Pope, Rob Jennings, the Wyoming Blockchain Coalition and Coin Center for their assistance.


Cryptoasset Valuations

Recently, an increasing number of crypto market participants and observers have become interested in a framework for valuing cryptoassets. Over the years many a dinosaur has proclaimed bitcoin valueless, an asset worse than tulips (at least with tulips you got a flower). Now they’re trying to figure out how valuable these assets really are. That’s a big win for the magic internet money community.

In this piece I share some early attempts at crypto valuations to give perspective on how early we still are, then discuss the theory I’m currently using and why, before walking through a fictional bandwidth coin valuation that includes a link to the actual model. Each section operates as a standalone, so feel free to skip amongst them.

Early Days of Cryptoasset Valuation

The first time I attempted to value bitcoin was at ARK Invest, where I started as a buy-side analyst in 2014. ARK became the first public fund manager to invest in bitcoin in September of 2015, and to do so we had to have some basis to justify current prices ($200’s), or at least quantify the potential for significant asset appreciation. Other asset managers will have to do the same as part of their fiduciary duty, which is one reason everyone’s become so interested in cryptoasset valuations. Below is an example valuation from a paper I wrote with Dr. Arthur B. Laffer to complement ARK’s 2015 investment, which serves as a nice starting point.

While an overly simplified assessment of value, this graph gets across a few key concepts, mainly total addressable market (TAM), percent penetration of that market, velocity, and number of coins outstanding…

Read More: Cryptoasset Valuations – Chris Burniske – Medium

An Intro to TrueBit: A Scalable, Decentralized Computational Court.

or: “An Intro to Panopticomputers: Code Execution Courts for Scalable, Decentralized Computation”.

The Ethereum community never ceases to amaze me. So many smart people working at the fringes of what’s possible. We haven’t really scratched the surface of what’s possible in the current iteration and we are already seeing amazing new opportunities come to the fore.

For the unenlightened, Ethereum can be described as a distributed “world computer” using blockchain technology. It allows developers the ability to upload code to a blockchain, upon which it executes the code when activated to change some information on a shared ledger. In other words, you can apply arbitrarily complex state changes to a shared, public (relatively) immutable ledger. Every node in the p2p network runs these state changes, whilst specific computers (the miners) make sure these state changes are difficult to reverse (by being rewarded the subsidy & fees). In order to execute state changes & computations one pays proportionally with the cryptocurrency of the platform, ether. The more computations you want to do, the more you will pay for it. The amount of computations are measured in a separate unit, called “gas”.

Source: An Intro to TrueBit: A Scalable, Decentralized Computational Court.

A New Approach to Cryptoasset Valuations

Valuation methodologies have historically lagged behind the development of the assets they represent. While the Dutch East India Company became the first entity to sell stocks on a public exchange in the early 1600s, it was not until the 20th century that a comprehensive framework for deriving the fundamental value of equity securities was developed. What Graham and Dodd benefited from in 1934 that their predecessors perhaps lacked was a broadly-accepted philosophy of disclosure (eventually codified in the Securities Act of 1933) and, more importantly, a reliable accounting system with unified measurement standards and practices— a common language for discussing value. Without rules of disclosure and requisite accounting conventions, current attempts at studying cryptoasset fundamentals will descend into the Confusion of Confusions that described seventeenth century stock market investment advice.

In this piece, I propose an extension to the prevailing methodology for valuing cryptoassets — one that I hope will alleviate confusion by clarifying the vocabulary used in discussions of value. In the first part of the post, I survey current debates on cryptoasset fundamentals and investigate their core monetary assumptions. I find current valuation models to insufficiently capture the complexities of these conversations, motivating a new approach, which I outline in the second part of this post. The proposed method intends to disjoin demand for commodities and demand for money by placing each asset in a broader economy of return expectations and friction constraints. It is important to note, before continuing, that valuation theorists generally caution against valuation of non-cash-flow-generating assets. As such, the methodologies outlined below remain largely exploratory and imprecise. Nonetheless, I believe these discussions to be valuable in developing directional insights on cryptoasset value, which can be a key lever for projects in optimizing their incentive structures (I write in more detail about this process of ‘mechanism design’ here).


Blockchain 2.0

Cryptocurrencies are only the beginning

Launching the Credit Suisse Blockchain Revolution Series: In this in-depth report, we analyse the market implications of blockchain technology in light of the bitcoin boom since our initial cross-sector and cross-border publication, Blockchain: The Trust Disrupter, roughly a year ago. While we make no comment on the valuation of particular cryptocurrencies, we believe the rise of bitcoin and Initial Coin Offerings highlights how transformative the underpinning blockchain technology will be across sectors, with financial services and capital markets at the front of the queue.

Various blockchain projects we discussed in our previous report are arriving at preliminary conclusions, transitioning from Proof of Concept to Pilot and even Production phases of development. To contextualise these over the medium to long term, we once again deliver a collaborative analysis of the following:

Cryptocurrencies and ICOs: Crucially, we see these providing momentum for further blockchain development, even if bitcoin and Initial Coin Offerings continue to encounter challenges to widespread adoption.

Blockchain’s utility: We examine the key advances and diversification of the applications that sit atop blockchain platforms – as well as the theoretical risks to blockchain itself. We also show project timelines to illustrate current and future positioning on the blockchain landscape.

Market implications: Contributions from 23 analysts across three geographies provide us with a cross-sector blockchain window through which we examine the Payments, Security, Banks, Exchanges, Business Services, Leisure, and Real Estate sectors.

Featured stocks include Sophos (Outperform; CS European SMID Focus List), Square (Neutral), LSE (Outperform; CS European Focus List), ASX (Underperform), Equiniti (Underperform), Experian (Outperform; CS European Focus List) and Playtech (Outperform).

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Many cryptocurrency traders like to compare different digital assets by market cap, but a clearer picture of reality can be gained by looking at other metrics.

Although bitcoin was launched as the only cryptocurrency in the world back in 2009, there are now thousands of alternatives that can be traded on various online exchanges. Many cryptocurrency traders track the price of these digital assets on sites like, but the key metric that is most often used to compare these cryptocurrencies, market cap, can sometimes be misleading.

Having said that, there are a few alternative metrics that can be used to compare the different digital assets found in the world today.

What’s Wrong with Market Cap?

While market cap is usually a useful metric for tracking the total valuation of a company, the same is not true in the world of cryptocurrencies. This is because there are often situations where the units included in the calculation for a coin’s market cap — simply the number of coins multiplied by the current price in US dollars — are not easily available for trade.

For example, the long-forgotten Auroracoin, which was targeted towards citizens of Iceland, was said to have a market cap of over $1 billion back in early 2014, but the reality was that a large number of the coins were locked up and unavailable for trade because they had yet to be airdropped onto the Icelandic public. In reality, the Auroracoin market cap was closer to just over $10 million.

Steem was another notorious example of an inflated cryptocurrency market cap. The market cap was reported as more than $400 million in July 2016, but this was due to a large amount of Steem being locked up as Steem Power, which is used as a sort of fuel to vote on the social media platform built around the token. Much of the new Steem coming into existence was locked up as Steem Power by default, and only a fraction of that new Steem was actually going into circulation.

In addition to these sorts of situations where new supply cannot actually be traded on an exchange, there are also numerous situations where one entity holds a large amount of the coins in existence from the start. If this entity (or a cartel of entities) keep their holdings off exchanges, they can create a situation where there is a meaninglessly high market cap for a coin with not much activity around it.

A study from blockchain analytics company Chainalysis concluded that nearly 4 million bitcoins are likely lost forever, which means the world’s most popular cryptocurrency’s market cap may also be quite misleading.

For example, if Forbes created 1 trillion ForbesCoins out of thin air and then sold one ForbesCoin to someone for $1, that would mean the market cap for ForbesCoin would be $1 trillion. But obviously, that valuation would be worthless information because the market would crash if all of the other ForbesCoins were put on the market.

Long story short: There is a lot of funny business that can go on with cryptocurrency market cap calculations. This is not to say that the market cap metric should be thrown out entirely, just that it needs to be combined with other data points.

Tracking Metcalfe’s Law

Earlier this year, FundStrat co-founder Tom Lee told Business Insider that 94% of bitcoin’s price movements over the past four years can be explained by tracking the number of users on the network. The FundStrat method for tracking user growth combines the number of unique addresses and the USD-denominated transaction volume per address.

This is a model based on Metcalfe’s law, which states that the value of a network is proportional to the square of the number of the users on the network.

It’s unclear if FundStrat adds a requirement for there to be some bitcoin in the counted addresses, but that would make sense to avoid a bit of noise. It costs no money to create a new address, but there is a transaction fee associated with transferring bitcoin to that new address.

It should be noted that this data point may be easily gamed on networks with low transaction fees, even if addresses with no balances are thrown out.

Another possible issue with this method is that new addresses are not necessarily created when users are buying bitcoin and other cryptocurrencies on exchanges (the exchanges hold the funds in their own addresses); however, user growth statistics are sometimes shared by exchanges in the space.

Another metric people have used to value these networks in the past is the number of transactions happening on the network per day. While the bitcoin price effectively grew along with the number of transactions per day in its early days, that trend was broken this year as the price exploded with the number of on-chain transactions per day remaining rather stagnant.

FundStrat’s use of USD-denominated transaction volume rather than the bulk number of transactions is likely a move in the right direction.

More Metrics to Watch

In terms of other data points to watch, it’s best to stick to metrics that are not easily gamed. For now, this could mean some combination of trading volume on exchanges (ignoring exchanges with no fees), the total USD-denominated transaction volume, and the median transaction fee paid to miners.

The easiest way to see there’s something fishy going on with a particular coin’s market cap is by looking at the trading volume on exchanges. A lack of liquidity on exchanges means a whale could come in with a large amount of coin and crash the market at a moment’s notice.

It’s also best to look at monthly volumes rather than daily volumes to avoid spikes caused by the hysteria around a boom or bust in a particular coin on a single day.

With USD-denominated transaction volume, one can see how much activity is actually taking place on the cryptocurrency network’s base layer. By combining this data point with the median transaction fee paid to miners, cryptocurrency networks would be unable to pat their stats by sending meaningless transactions back and forth with large sums of money.

The amount of money collected by miners for transaction fees is another interesting metric to track. This may be the most illuminating data point to watch in terms of learning about the usefulness or desirability of a specific cryptocurrency network. This is effectively the total amount of money that people are willing to pay to use the network on a daily basis.

One thing to keep in mind here is that some of these alternative mechanisms for measuring the value of cryptocurrency networks become worthless on systems with strong privacy guarantees. For example, it is impossible to know how much money is being sent around the Monero and Zcash networks.

I first used Bitcoin in 2011 and have covered the topic as a writer since early 2014. Subscribe to my daily newsletter, YouTube show, and podcast. Follow me on Twitter (@kyletorpey).

Source: – Comparing Bitcoin and Other Cryptocurrencies by ‚Market Cap‘ Can Be Very Misleading

Blame Mexican drug dealers when you have to report your crypto trades to regulators.

EU Amends AML Laws for Cryptotrading as US Ponders: Expert Blog

Expert Blog is Cointelegraph’s new series of articles by crypto industry leaders. It covers everything from Blockchain technology and cryptocurrencies to ICO regulation and investment analysis. If you want to become our guest author and get published on Cointelegraph, please send us an email at .

Larry Fink, CEO of the world’s largest asset management company, BlackRock, told a panel at the Institute of International Finance:

„Bitcoin just shows you how much demand for money laundering there is in the world. It’s an index of money laundering.“

Fink’s sentiment about virtual currencies reflected that of an IRS Criminal Investigation division official who told reporters in 2013 – after concluding a multi-jurisdictional investigation and shuttering a $6 billion virtual currency exchange for money laundering:

“If Al Capone were alive today, this is how he would be hiding his money.”

Drugs and money laundering

Recently, the U.S. Drug Enforcement Administration (DEA) published a report that provides an overview of the US efforts to police the global illicit drug trade. The report claims that virtual currencies – Bitcoin, Zcash, Monero, and Ethereum – are increasingly being used in the digital underground to facilitate trade-based money laundering schemes for transnational criminal organizations (TCO).

Over the past 10 years, the drug landscape in the US has vastly changed, with the opioid threat reaching epidemic levels in a significant portion of the country. Drug poisoning is a the leading cause of deaths in the US, with approximately 170 people dying from it every day. The opioid epidemic was declared a national emergency by President Trump last August, when Bitcoin was trading at $4,000.

Mexican TCOs and El Chapo

According to DEA’s report, the Mexican TCOs are the greatest criminal drug threat to the US. In the beginning of this year, when Bitcoin was trading at $1,000, the Sinaloa Cartel kingpin Joaquin Archivaldo Guzman Loera (El Chapo) was extradited by Mexico to the US. The extradition followed Mexico’s recapturing of the fugitive drug lord following his brazen escape from a maximum-security Mexican prison via an elaborate mile-long tunnel that connected to his prison cell.

In the US, El Chapo is facing a long list of criminal charges, including drug trafficking and money laundering, for running one of the most powerful and sophisticated transnational drug trafficking organizations in this world.

DEA’s report ties the extreme success of the Mexican TCOs to multiple factors, such as:

  1. By controlling lucrative southwestern drug smuggling corridors, Mexican TCOs export and transport significant quantities of illegal drugs into the US. El Chapo, in an interview with Rolling Stone magazine, boasted that he could “supply more heroin, methamphetamine, cocaine and marijuana than anybody else in the world.” He proudly took credit for overseeing up to half of the illegal drugs coming into the US from Mexico.
  2. To accomplish this, El Chapo said he had “a fleet of submarines, airplanes, trucks and boats.“ Last year, Mexican law enforcement officials confiscated the Sinaloa Cartel’s 599 aircrafts—a fleet larger than Aero Mexico’s. Some of these airplanes were outfitted with the latest intelligence, surveillance and reconnaissance (ISR) technologies to go undetected by the US border patrol.
  3. After selling the illegal drugs in the US – which brought in $64 billion each year – the Mexican TCOs needed a way to get the drug money back to Mexico. It became increasingly difficult for Mexican TCOs to deposit their illicit cash proceeds directly into US banks and other financial institutions once the worlds largest banks – HSBC, Wachovia and Citigroup – were hit with billions of dollars in penalties for laundering Mexican cartel money. Mexican TCOs were forced to resort to more complex multi-jurisdictional trade-based money laundering (TBML) schemes that included using cryptocurrencies.

Money laundering using cryptocurrencies

The DEA report pointed out that China has become an important hub for money laundering schemes. TCOs purchase large shipments of “made in China” goods using Bitcoin. These “made in China” goods are then shipped to businessmen in Mexico and South America who reimburse the TCOs in local currency. Bitcoin payments are widely popular in China because it can be used to anonymously transfer value overseas, circumventing China’s capital controls.

US proposes cryptocurrencies amendment to AML laws

On November 28, 2017, when Bitcoin was trading at $9,880, the US Committee on the Judiciary held a hearing on Senate bill S. 1241, titled ‘‘Combating Money Laundering, Terrorist Financing and Counterfeiting Act of 2017.” This bill amends the current US anti-money laundering laws (AML) by making virtual currencies more of a target for regulatory oversight. Prepaid access devices, digital wallets and other digital currency exchangers as being subjected to reporting requirements if they contain the virtual currency equivalent of $10,000 or higher.

According to Judiciary Committee Chairman Sen. Chuck Grassley, S. 1241 is designed to help modernize US AML laws. Grassley explained:

“[S. 1241 will give] law enforcement more tools to prosecute and close legal loopholes. It will clarify rules on evidence for prosecutors and judges, which in turn will help increase convictions. It will make it easier to go after drug kingpins, drug cartels and terrorist organizations by being able to seize virtual currencies more easily.”

EU amends AML transparency laws for cryptotrading

European governments are pushing for global Bitcoin regulation at the G20 level, coordinated by the Organization for Economic Co-operation and Development (OECD). Amid mounting alarm that virtual currencies are being used by multinational money-launderers, drug traffickers and terrorists, the German Finance Ministry explained:

“It makes sense to discuss the speculative risks of virtual currencies and their impact on the financial system at international level.”

Several EU countries will create interconnected registries this year, to record details of the beneficial ownership of inter alia companies and trusts under the EU Fourth Anti- Money Laundering Directive (4AMLD). These central registries of beneficial owners will be made available to local tax authorities and will be shared between tax authorities within the EU (OECD-BEPS Action 12).

On December 20, 2017, when Bitcoin was trading at $17,000, the European Parliament and its executive arm, the European Council, agreed to amend the 4AMLD. This amendment will make virtual currency exchange platforms and wallets subject to the beneficial ownership-reporting requirements (4AMLD Virtual Currency Amendment).

These new regulations will require an increase in transparency by trusts and trading companies, which will be pressured to reveal the holders of virtual currency in order to thwart potential money laundering, tax evasion and terror funding. Primary among these regulations is a requirement to provide beneficial ownership information to authorities and “any persons that can demonstrate a legitimate interest” to access data on the beneficial owners of trusts.

The 4AMLD Virtual Currency Amendment must be formally adopted by EU Member States and turned into national laws within 18 months.

Source: EU Amends AML Laws for Cryptotrading as US Ponders: Ex… | News | Cointelegraph

The prevailing wisdom for cryptocurrency founders is that you win through hype: talk like an infomercial, parade clownish speakers around conferences, and attack critics relentlessly for “spreading FUD.” That approach works; many aggressive entrants have muscled their way to the top of the charts with these tactics (you know who you are).

But there’s another approach that’s less talked about and just as widely employed, one that cryptocurrency founders and investors need to pay attention to: anti-hype.

Ethereum recently fell from second place to third place in market cap. That was big news, but outlets are covering it wrong. The story isn’t that Ripple beat Ethereum, it’s that Ethereum is playing the anti-hype game. It would be trivial for Ethereum to flex its muscle and rally past Ripple, perhaps even past Bitcoin itself. They power almost every cryptocurrency in the world and their founder, Vitalik Buterin, is the closest thing to a blockchain figurehead. But instead of talking up Ethereum on TV or making blustery statements about how Ethereum will disrupt this or that, Buterin calls token sales overvalued, lambasts bad actors, and makes statements like these: