CryptoCompare MJAC Conference: Highlights on Valuation, Regulation, Tokenization and Much More

Earlier this month, cryptocurrency data provider CryptoCompare teamed up with renowned disruptive tech event organizer MJAC to bring some of the world’s leading blockchain and cryptocurrency experts to London’s financial district

CryptoCompare & MJAC London Blockchain Summit” featured talks on some of the industry’s hot topics, including how to value cryptoassets, the rise of blockchain technology, and the tokenization of everything. On the main stage, where speakers from companies like as Coinbase, Ernst & Young, Citigroup, and Circle shared their thoughts.

Relative and Fundamental Valuation Approaches to Cryptoassets

Chris Burniske, co-founder of Placeholder Ventures and co-author of the book “Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond,” was the event’s keynote speaker and started it off with an extremely interesting perspective on how cryptocurrencies can be valued, passing through some interesting data points. Focusing on NVT Ratio (Network Value to Transactions Ratio) which is similar to the PE Ratio used in equity markets.

He noted that cryptocurrencies are currently valued according to their market cap, which is influenced by their circulating supply. Manipulating said supply allows coin owners to get their coins on top of data providers, which will see investors suffer from fear of missing out (FOMO) and invest. He called this the ‘coin market cap game’ and gave an example of Veritaseum which marketcap was not supported by a healthy daily trading volume.

Will Businesses Who Don’t Consider Blockchain, Risk Falling Behind?

Next up was a panel in which the future of blockchain technology and its applications were discussed by various prominent industry personalities. These were Vitaliy Kedyk, an executive director at crypto exchange CEX.IO, Stephan Tual, founder of Atlas Neue, Edd Carlton, head of OTC Trading at BlockEx, and Norbert Redkie, CEO and founder of TRUST.

There was in depth discussion on companies using what’s right for them, whether that involves blockchain technology or not. The key is not to use blockchain as a buzzword o raise more capital or get a higher valuation. The consensus from the panel was that blockchain technology has been used in many situations when a cheaper and more efficient centralized database would suffice.

"If your only goal is to raise money, there are better, cleaner and safer ways to raise money than blockchain"

Cassius Kiani

Creating an Open Financial System

Zeeshan Feroz, the CEO of Coinbase UK, spoke about how cryptocurrencies are creating an open financial system. During the talk he revealed that Coinbase is:

“trying to rebuild the entire financial system, but [is] trying to accelerate hundreds of years of evolution into, hopefully, a few years.”

Zeeshan Feroz

The talk even had some controversy when he used the term “new world order” to describe cryptocurrency revolution. Feroz clarified he used the term to refer to a “decentralized future,” not world dominance.

The Tokenization of Everything

Next up was Claire Wells, Circle’s Legal & Business Affairs Director for Europe, she spoke about the tokenization of everything and the advantages blockchain technology brings to the table. Per Wells, through smart contracts we can “reinvent what it means to interact with someone on a legal basis”.

During her talk, Wells made a distinction between three different “buckets” that allow the industry’s key players to operate while protecting consumers and ensuring they won’t stifle innovation. These “buckets” were cryptocurrencies, cryptocommodities, and cryptosecurities.

While cryptocurrencies are payment methods - means of exchanging value - cryptocommodities allow users to “consume” a resource of an application, with Ethereum being an example. Cryptosecurities “are a new form of security,” that has capabilities “way beyond paper-based bonds.”

Are Money Making Machines Too Good to be True?

Joshua Riddett, the founder and managing director of Easy Crypto Hunter, entertained the audience with a talk on cryptocurrency mining machines, dubbing them “money making machines”. During the talk, Riddett addressed the volatility most cryptocurrencies have, and several mining strategies, such as mining RavenCoin instead of a more popular cryptocurrency to increase profits and presumably take advantage of a lower difficulty.

The Future of Crypto Derivatives

Early in the afternoon, the event saw a discussion panel go over the future of cryptocurrency derivatives. The discussion panel included Mark Lamb, head of liquidity at Coinfloor, Ryan Radloff, the CEO of CoinShares UK, and Glen Goodman, an investment expert. The discussion varied throughout the talk, and addressed bitcoin forks, cryptocurrency trading platforms and the profit they potentially make, and whether top cryptocurrencies are or aren’t overpriced. According to Ryan and Mark, physically settled cryptocurrency futures were going to be the ‘holy grail’, however, custodial solutions were still a challenge.

Regulating Cryptocurrencies

A discussion panel on potential cryptocurrency regulations followed, with Teana Baker-Taylor moderating the panel, in which Simon Taylor, a blockchain practice lead at 11:FS, Ruth Wandhöfer the global head of regulatory & market strategy at Citi, and Martin Bartlam the head of finance and projects at DLA Piper, went over the crypto space.

The discussion was extremely interesting, with the panelists noting that it “shouldn’t be easy to raise $100 million”, referring to the initial coin offering (ICO) craze that took over the crypto space. They also addressed plagiarism, valuations, and crimes cryptocurrencies are often associated with, including money laundering and terrorism financing.

The full-length videos of the talks can be found on YouTube

Weekly Newsletter

BitMEX Slammed as Roubini Raises the Stakes in War Against Crypto

Neil Dennis

Every new concept has its critics and there's none so vehemently opposed to cryptocurrencies as New York University academic Nouriel Roubini, who has just taken his most vicious swipe yet at the emerging asset class.

In an essay entitled "The Great Crypto Heist", published this week on the website Project Syndicate, the NYU Stern Business School professor accuses financial regulators of "being asleep at the wheel" while an army of unregulated exchanges, propagandists and scammers commit "rampant fraud and abuse".

He singles out crypto-derivatives exchange BitMEX as being a particular threat to retail investors. Roubini clashed earlier this month with Arthur Hayes, the chief executive of BitMEX.

Regulation

But first, the professor explains why the sector needs to be more closely monitored. The broader financial sector came under increased regulatory scrutiny following the 2008 financial crisis, to protect investors and society. 

The regulatory regime does not capture cryptocurrencies, however, which are launched and traded outside the domain of official financial oversight, he says.

The result is that crypto land has become an unregulated casino, where unchecked criminality runs riot.

BitMEX

He rounds on BitMEX, registered in the Seychelles, which offers highly-leveraged bets on the rises and falls of cryptoassets: products more broadly known as derivatives.

These investment products have come under the microscope of regulators in many countries. The UK's Financial Conduct Authority would like to ban the sale of cryptoasset derivatives and exchange-traded notes to retail customers, saying they are too difficult to value and are prone to extreme price movements due to the volatile moves of the underlying cryptoassets.

Other global regulators have made moves to reduce the amount of leverage offered by crypto-derivatives exchanges. Roubini points out that with a 100-1 leverage, even a 1% price move in the underlying assets could trigger a margin call that wipes out the investor's entire account and leave them owing the exchange.

Hayes, boasted openly that the BitMEX business model involves peddling to 'degenerate gamblers' (meaning clueless retail investors) crypto derivatives with 100-to-one leverage.

BitMEX aslo runs a proprietary trading desk - an internal, for-profit desk that trades cryptocurrencies with its own money - that has been accused of front-running its own clients, Roubini asserts. He adds:

Hayes has denied this, but because BitMEX is totally unregulated, there are no independent audits of its accounts, and thus no way of knowing what happens behind the scenes.

Perhaps his most grand accusation in the essay, however, is that exchange is being used for criminal activity:

BitMEX insiders revealed to me that this exchange is also used daily for money laundering on a massive scale by terrorists and other criminals from Russia, Iran, and elsewhere; the exchange does nothing to stop this, as it profits from these transactions.

Tiff in Taipei

Roubini accused Hayes this month of holding back the broadcast of a video recorded of their clash at conference in Taipei - to which Hayes had secured exclusive right to.

In the essay, he continues this accusation, saying:

I suppose this is par for the course among crypto scammers, but it is ironic that someone who claims to represent the 'resistance' against censorship has become the father of all censors now that his con has been exposed.

Crypto Cancer Metastasized

In his final dig at the industry, Roubini says crypto trading has created a multi-billion dollar industry that does not just include the exchanges, but also "propagandists posing as journalists, opportunists talking up their own books and lobbyists seeking regulatory exemptions.

It is time global regulatory bodies stepped in, he concludes:

So far, regulators have been asleep at the wheel as the crypto cancer has metastasized. At a minimum, Hayes and all the others overseeing similar rackets from offshore safe havens should be investigated, before millions more retail investors get scammed into financial ruin.

So far, Hayes appears to have remained silent following the article's publication. No activity on his Twitter account. But the ball is now firmly in his court as the war of words heats up.