After the close of the first day of the Voice of Blockchain conference in Chicago on Monday, dozens gathered on the tenth floor of the venue for a Digital Asset Summit hosted by FinTank, a fintech development hub based in Chicago, as well as Fidelity Digital Assets, Galaxy Digital, and Token Daily. It was a closed event unaffiliated with the Voice of Blockchain conference, though many attendees from VoB were there.
Well-known figures from the blockchain/digital assets industry such as Colleen Sullivan (CMT Digital), Rumi Morales (Outlier Ventures), Sunayna Tuteja (TD Ameritrade), David Carman (FinTank), and Bob Zagota (Kraken) gave presentations for the attendees. Even Zooko Wilcox, creator of the cryptocurrency Zcash, showed up.
Here are some highlights from the evening.
Zcash creator’s keynote presentation
Zcash, the 15th biggest cryptocurrency in the world by market cap at press time, is a privacy coin – a type of digital asset that uses cryptography to provide anonymity for those transacting with it, which can be useful if you don’t want the government, or corporations like Facebook, to know how you’re spending your money.
Wilcox began with a brief overview of the history of cryptography, highlighting its use in ancient Rome, World War II, and modern cybersecurity protocols. He then attempted to explain to the crowd – which consisted of just as many lawyers, executives, and non-technical professionals as it did engineers and coders – how “Zero Knowledge Proofs,” a fundamental part of Zcash’s technology, work.
Wilcox acknowledged that even he considered the concept to be “mind-boggling,” but that he hoped his presentation would help the audience understand it better. “I have some data,” he said, “and I’m gonna prove to you some facts about the data without revealing the data to you.” The quirky demonstration involved big, bold “1s” and “0s” (representing a user’s data) attached to clipboards, which Wilcox shuffled around without looking at them…a bit like the classic “ball and three cup” routine favored by street magicians. Each time he shuffled the numbers around, he asked his assistant whether the numbers had been shuffled; his assistant said either ‘yes’ or ‘no’ until Wilcox was able to catch his assistant in a lie. After repeating this process several times over the course of three minutes, he ended the presentation. “This is why we have computers do this,” he said.
Of course, when it comes to crypto, regulation usually comes up in the conversation in one form or another, whether it’s bitcoin maximalists expressing indignation at the notion of a bitcoin investment vehicle, or a startup rep asking about the old, “is it a security?” hat.
Elizabeth Pendleton of the CFTC had the difficult task of representing the Commission in the midst of audience questions that dared her to say that this or that token is a commodity out loud. At one point, the topic of EOS came up. The creators of EOS, Block.One, recently settled with the SEC over charges of running an unregistered security.
Block.One raised $4.1 billion in the sale, but now must pay $24 million in fines. The settlement only applied to the Ethereum-based proxies – the ERC-20 tokens – that Block.One sold in the initial offering – not the EOS tokens for which customers swapped the ERC-20s after the sale. One audience member brought this up, saying, “So…it kinda seems like EOS might be a commodity after all. Care to comment?” Although the question was directed at the panel of four speakers, of whom Pendleton was one, everyone in the room knew what was really up. Pendleton let out an audible sigh as the room chuckled. She handled the curveball well, refusing to give an outright answer on behalf of the CFTC – which had not yet issued an official statement on the matter.
Pendleton did share her impressions of the Crypto Rating Council, a cryptocurrency trade organization formed to help crypto and blockchain firms avoid committing infractions of securities laws (its formation was announced earlier that day). The Rating Council introduced a 1-5 rating scale to help determine the security-ness of a token – which is a word I just made up.
Pendleton said she thinks the scale is “a good discussion-starter,” but perhaps an oversimplification of a broad, complex subject. She also said that she was “intrigued” by it.
A lot of the night’s discussion centered around the ongoing maturation of the crypto markets. Representatives from both crypto startups and more established financial institutions took turns sharing how their organizations are helping to drive adoption of the technology and develop its infrastructure.
Josh Deems from Fidelity Digital said bitcoin is like a platypus – “It’s hard to classify.” He said that this makes institutions that are interested in becoming involved with digital assets hesitant. He said it’s hard for institutions to calculate the Alpha and Beta of a new asset class if it doesn’t fit existing models.
Sunayna Tuteja, Head of Digital Assets & DLT (distributed ledger technology) at TD Ameritrade, said consumer demand would continue to push institutions to adopt new products and services in the digital asset space, which is how her company got involved. “When clients are asking every single day, ‘When are you doing this?’ you have to answer them.” She also said that “the more good actors are in the space successfully doing things, the more cooperation they’ll get from regulators.”
Facebook’s Libra project also came up, of course. While some are skeptical of the trustworthiness of Libra because of its connection to Facebook and its privacy scandals, some of the speakers seemed to think Libra would be a tremendous driver of adoption for digital assets – especially Diogo Monica, co-founder and president of Anchorage Hold LLC, who revealed that Anchorage was one of the Libra Foundation’s members currently running test nodes for the protocol while discussing the regulatory hurdles Libra has been facing for months.
“This is something I can tell you,” he said, “Libra is ahead of schedule from a technical standpoint. It works. Anchorage is one of 5 test nodes running transactions.” According to him, Libra’s development was designed to be fast. He said Libra planned to meet regulatory concerns head-on from the beginning, so that each regulator could decide how best to handle Libra based on the needs of the people in their jurisdiction.