The 6th DCU Quarterly Symposium on Capital Markets and Fintech: ICOs and Cryptocurrencies

M

MrEarl

Registered User
Messages
2,707
IC4 Invites you to The 6th DCU Quarterly Symposium on Capital Markets and Fintech: ICOs and Cryptocurrencies

The cryptocurrency and Initial Coin Offering markets have grown rapidly and include an ever-broadening range of products and participants. Despite providing new investment opportunities, they also present investors and other market participants with many questions about their technical, legal, financial, and business implications.

DCU Business School has joined the European Capital Markets Cooperative Research Centre, a foundation to promote and facilitate capital markets research amongst research institutions and industry, and has launched the Finance Innovation Group in order to support the Irish financial services industry and to explore the potential impacts of technology innovation on businesses.

This sixth symposium organised by the Finance Innovation Group at DCU will discuss the potential impacts of ICOs and cryptocurrencies on the Irish and international financial sector, with a particular focus on the how the technical and legal implications of these new financial instruments.

Speakers on the day will include:
  • Professor Mark Cummins
  • Pearse Ryan
  • Christopher O'Reilly
  • Brendan Dillon
Registration

Tickets for this symposium are free, however, places are limited so registration is required.

Click HERE to register


Date and Time
Wed 6 June 2018
09:00 – 13:00 IST


Location
Arthur Cox Dublin
Earlsfort Terrace
D02 T380
Dublin 2
 
A very interesting morning.

There were three speakers from Arthur Cox. They are doing very little blockchain work but a lot of work on ICOs. They are advising on a coin exchange which they find very exciting.

They stressed the difference between smart contracts and smart legal contracts. Apparently a smart contract is not a contract at all.

The astonishing thing for me is how different it was from the Andreas Antonopulos meeting.

Andreas will measure the success of Bitcoin according to these criteria:

  • privacy
  • open source
  • borderless
  • decentralisation
  • lack of censorship
The presenters today spoke about all the regulatory issues and how to comply with them. And how Blockchain activity is taxed.

If you are thinking of launching an ICO, then it would have been a great seminar to attend.

There are three types of tokens
  • A payment token
  • A utility token
  • An asset token/security token
If it's a payment token, you would have to comply with Know Your Customer Rules and Anti Money Laundering.
If it's an asset token, it would probably be classified as a transferable security and so would be subject to the Prospectus Rules

The trick is to try to have it classified as a utility token, which is outside the regulatory regime as it is effectively a gift token. Gift Tokens are not regulated.

Apparently most ICOs pay lip service to this and do very brief whitepapers.

Breaching the Prospectus Regulations is a criminal offence with big fines and potential jail sentences.

Apparently, going offshore doesn't help much, as just offering them for sale generally, would make you liable to prosecution in Ireland.

Taxation

The presenter raised lots of issues, but these are just two which I thought interesting from a tax planning point of view.

Individuals should make sure that any profits from dealing in Bitcoin are treated as capital gains and so subject to CGT at 33% instead of Income Taxes at 53%

On the other hand, Corporations should have their profits treated as trading, so they would be subject to 12.5% CT instead of 33% CGT.


If you are launching an ICO in Ireland, try to separate out the Intellectual Property into a separate company so that it comes within the Knowledge Box Regime and would be subject to 6.25% Corporation Tax.
 
Last edited:
The disruption of Venture Capital funding

Connor Cantwell of Cosimo Venture Capital spoke about the way that ICOs are disrupting VC funding at all stages of the fund raising.

But in particular, ICOs now account for over 50% of seed capital venture funding.

They are launching the first "Evergreen VC ICO" in the coming months, having been approved by the regulators in a few different jurisdictions - America, The Caymans, Malta and somewhere else. [broken link removed]

Apparently this will be just like a unit-linked fund. They will issue coins or tokens instead of units in exchange for real money. CosimoX will invest this money in ventures and the price of the CosimoX will reflect the value of the underlying investments.

In contrast, Brendan Dillon spoke about disrupting VC through the "Consensus Clubs". Apparently, there will be a number of VC clubs. They will use the power of the crowd to assess ventures. The member will put down a deposit with the club to join, but will invest their own money directly in the investee company. Once the club decides to invest, every member must invest. I don't really understand where the blockchain comes in here. There is a video about it here, but I am no better informed having watched it.

Maybe I am old fashioned...
But if I want to allocate some of my money to venture capital investment, I think I would prefer to do it through a regulated VC fund.

Maybe CosimoX makes it easier for smaller scale investors to participate in Venture Capital?

I get the impression that doing something ordinary but calling it "blockchain" was like the old companies adding .com to their names and appearing far more innovative than they were in reality.

Brendan
 
Last edited:
Interesting, thanks for the insights Brendan.

I would be careful with treating any profits from Crypto trading at 12.5%. What if you only 'invest' once in a 12 month period and then sell at a significant gain, I wouldn't like to be convincing Revenue that this was part of the company's main trade. I guess if the company doesn't do anything other than Crypto trading/investing then it might be a bit more legit. But if it's a side thing of an existing company I would be careful on this one. Just my 2 cents!

Interesting too that 50% of seed funding is via an ICO.....that's not an insignificant number. I can't help thinking that the problems we will face down the road will be even greater when the vast majority of these go to the wall!

Who else of note were in attendance?

Thanks
 
Negotiator said:
Who else of note were in attendance?
Click to expand...

I didn't know many of the people - there were about 40 there.

There was a guy from the Central Bank. Don't know his name. He had an American accent.
Mai Santamaria from the Department of Finance who had presented at the Hibernia Forum gig.

Brendan
 
Brendan Burgess said:
They stressed the difference between smart contracts and smart legal contracts. Apparently a smart contract is not a contract at all.
Click to expand...
If a smart contract is written by a smart contract lawyer, is it then a smart contract?

Brendan Burgess said:
The astonishing thing for me is how different it was from the Andreas Antonopulos meeting.
Click to expand...
Antonopoulus doesn't decide what aspect of bitcoin or crypto he's going to speak about until he begins..or so he says. I guess there are many facets to crypto...so plenty of sides to approach it from. Financial Regulation is something Arthur Cox concern themselves with, so I guess it makes sense that they would approach crypto/blockchain from this angle.

As regards classification of 'tokens', the SEC were to rule on whether Ripple and Ethereum should be classed as utilities or securities...was supposed to happen last month but I *think* they have yet to rule. Lots of speculation and interest in that due to the implications. There's no disguising the fact that Bitcoin falls under payment token.
 
tecate said:
If a smart contract is written by a smart contract lawyer, is it then a smart contract?
Click to expand...

Hi tecate

I don't know what a smart contract is so I don't understand the distinction.

I had lots of questions so I focused on the difference between the Antonopulos approach and their approach.

Brendan
 
Brendan Burgess said:
I don't know what a smart contract is so I don't understand the distinction.
Click to expand...
I don't code so I only have a rudimentary understanding. However, despite not being a techie, I think I understand enough to recognise that the implications are massive.

Basically, a smart contract involves programmable objects on the blockchain. These objects encapsulate terms of agreement. They're programmed using lines of code that are structured on an 'if' & 'then' basis...
i.e. 'if' X occurs, 'then' Y automatically is programmed to run. An escrow could be set up this way to safely facilitate a buyer and a seller. It assumes a trustless scenario and both parties don't have to trust each other - they can depend upon the code to execute as it's written.

With that, there's no reason why more complex smart contracts cannot be coded/written. Bitcoin has a very basic scripting language so it has very little scope in terms of smart contracting capabilities. Programmable money really starts with Ethereum - and it's why such a big developer community has grown up around it. Other crypto's have followed that build on the smart contracting ability further, facilitating coding in languages that are more ubiquitous and possibly offering more flexibility in terms of facilitating more complex smart contracts.

With the Internet of Things (IoT) and machine to machine (M2M) economy, smart contracting could be used. For example an autonomous vehicle could pay another machine (charging station) for charging a car through smart contract. IoT sensors could become the programmable object that triggers the 'if' - which then automatically leads to the execution of the 'then' statement. M2M may not be a current day example but it's coming. There are other applications - just needs the creativity of developers to figure out how to code for the given application.


That's probably not the best explanation - there are probably others here who could explain it away better.
 
Brendan I spoke with you on the morning of the event and your view at the time was Bitcoin was worth little or nothing.

After seeing the presentations at this event and reflecting on the Andreas Antonopoulos event would you still be of the same opinion?

And if I broadened the question to other crypto tokens would you be of the same opinion on those?
 
Hi Crypto

Yes. Bitcoin has no financial value whatsoever. Andreas didn't talk about its financial value except to say that the value is not one of his measures of success.

I don't know enough about the other cryptos. I assume most of them are worth nothing. However, if I understand it correctly, the proceeds of CosimoX will be used to invest in venture capital companies. As such it should have value. I suspect that the hype may well inflate its value.

So, the payment tokens are worth nothing.
The asset tokens will be worth what their underlying assets are worth - but their price will probably exceed their worth.

Brendan
 
Brendan Burgess said:
Andreas didn't talk about its financial value except to say that the value is not one of his measures of success.
Click to expand...
A.A. doesn't get involved in the speculative aspect of things. To him, it's a side show. He is a proponent of the actual technology. However, he has on many occasions expressed the opinion that over time, the value of FIAT will slowly be debased and that value will transfer to crypto.
 
Brendan,
You have an interesting take on this sector, it was interesting to hear your perspective. Just to clarify CosimoX invests in new technology ventures including crypto currency startups.

There are numerous examples of its investments for reference on its website under /news and press
 
Last edited:
tecate said:
A.A. doesn't get involved in the speculative aspect of things. To him, it's a side show. He is a proponent of the actual technology. However, he has on many occasions expressed the opinion that over time, the value of FIAT will slowly be debased and that value will transfer to crypto.
Click to expand...

In his Dublin talk he stated there was little to gain from moving to crypto in markets like Ireland with functioning bank systems and easy, fast, cheap payment alternatives. He added that he saw the real use case for cryptos in complete basket case economies or in nations controlled by what he termed 'despotic leaders'.
 
Leo said:
In his Dublin talk he stated there was little to gain from moving to crypto in markets like Ireland with functioning bank systems and easy, fast, cheap payment alternatives. He added that he saw the real use case for cryptos in complete basket case economies or in nations controlled by what he termed 'despotic leaders'.
Click to expand...
You're quite right (not that I was there - but he has on numerous instances expressed this viewpoint). I don't disagree with it - it seems completely rational to me.

Just so there's no misunderstanding re. my previous post, he's not talking about crypto's replacing FIAT. Both will co-exist as they both have their advantages and disadvantages. However, the value of FIAT will further erode.
 
Brendan Burgess said:
what will the value of fiat erode in relation to?
Will all fiat currencies devalue simultaneously?
Click to expand...
Through central bank practices of printing money. As regards simultaneously devaluing, I wouldn't have thought so - it depends upon the practice of those that administer each particular FIAT. That brings us back to the most obvious use case for crypto that A.A. refers to - basket case economies where there's likely to be wholesale printing of FIAT.
 
Brendan Burgess said:
There are three types of tokens
  • A payment token
  • A utility token
  • An asset token/security token
If it's a payment token, you would have to comply with Know Your Customer Rules and Anti Money Laundering.
If it's an asset token, it would probably be classified as a transferable security and so would be subject to the Prospectus Rules
Click to expand...
SEC finally confirm that Ethereum is not a security. This clarifies the tax situation and by all accounts may lead to ETH futures being rolled out.
 
Brendan Burgess said:
[Arthur Cox] stressed the difference between smart contracts and smart legal contracts. Apparently a smart contract is not a contract at all.
Click to expand...
We're a couple of years on - and smart contract tech is still being worked on. I think that the following summary gives ordinary people an understanding of what smart contracts are:

Smart Contracts Explained


They are not law in the legal sense but given the way that they're structured, maybe there's no need.
 
Last edited:
You must log in or register to reply here.
Back
Top