Coin Congress Day 1: Debate Over New York Regulation Rages On
Day one of Coin Congress, held at the Hilton Hotel Union Square in San Francisco, brought together familiar faces from the cryptocurrency industry to offer new perspectives and teachable moments on a variety of hot topics.
However, as at last weekend’s The North American Bitcoin Conference in Chicago, here too discussion related to the New York Department of Financial Services’ (NYDFS) proposed plans for regulating digital currencies dominated the proceedings.
The subject provided fuel for divergent opinions, as lawyers, investors and startup members all voiced differing thoughts regarding the potential rules.
Boost VC’s Adam Draper, who told the audience that 12 of his newest Tribe 4 of startups are bitcoin companies, may have offered the most succinct opinion.
“The New York rules suck. It was awful. The worst possible outcome. It’s worse than banking regulation.”
This topic was the highlight of the first day of the conference, which continues with another jam-packed schedule on 24th July.
NYDFS framework dissected
A panel featuring some of the top bitcoin startup accelerators did not have a sunny disposition on the subject and what it will mean for bitcoin businesses.
“They literally just listed a bunch of rules,” said 500 Startups partner Sean Percival. He also added that user growth is still an immense challenge. “We look at the addressable audience,” Percival said. “And right now the addressable audience is small.”
Scott Robinson of Plug and Play Technology Center advised anyone thinking about entering the bitcoin space to start considering how they will comply with future regulatory policy. “You should definitely know your KYC/AML really well,” he said.
Anthony Di Iorio, who runs Toronto coworking and accelerator space Bitcoin Decentral, said alternative coins offering advanced properties are an exciting prospect for the future along with the groundbreaking technology bitcoin brought to the masses.
“I’m a big bitcoin fan, but I am a believer in the appcoin systems coming out now,” Di Iorio said.
Lawyers urge cooperation
A perfunctory regulation panel made it known that in their opinion, the bitcoin community will have to comply with regulators’ compliance demands no matter what.
Dan Wheeler, a regulatory partner at Bryan Cave LLP, said not taking the regulation issue seriously could be very problematic for bitcoin businesses not following the rules.
“This is an area that the regulators are very good at. They are very sophisticated in looking at KYC programs. And unfortunately there are consequences for not doing it right.”
Tim Bynum, chief compliance officer for BitPay, implored the audience to offer feedback to the New York state regulators. “Please read all 40 pages. KYC is littered throughout the document. We need your comment,” he said.
Bynum added regulation is just going to be part of participating in the bitcoin economy going forward:
“I think concentrate on what is the problem and what is the solution. I think [regulation is] going to be a cost of doing business.”
Jose Caldera, vice president of marketing and products for IdentityMind Global, said the IRS ruling on bitcoin classifying it as property shows the different capabilities BTC has over regular money – and that it is a new paradigm for regulators to think about.
“I think it deserves its own financial asset class. That’s why it’s property, that’s why it needs that classification.”
A new economy
ZipZap CEO Alan Safahi, an experienced operator in the payments industry, conducted the keynote for Coin Congress. “I guess I’m the oldest guy in this space, so they asked me to talk about the state of bitcoin,” he playfully noted.
Safahi pointed out in his presentation that the cryptocurrency bellwether, bitcoin, is growing at a dramatic pace versus its counterparts, even despite regulatory threats. He said, in terms of bitcoin’s overall growth: “Bitcoin outpaces all altcoins.”
As further evidence of this, he pointed out a number of companies that have emerged around bitcoin’s technology – an ecosystem other coins have not yet developed. Safahi explicitly spoke about solutions providers such as Coinbase and Circle helping bring further legitimacy.
“[Now] there’s a whole category of solutions providers,” he added.
Yet, there are still things holding bitcoin back. After Safahi’s presentation, GoCoin CEO Steve Beauregard lamented the difficulty of QR codes.
“Nobody loves QR codes. I think the saying goes, ‘I love QR codes – never’.”
Binary Financial managing partner Harry Yeh offered an interesting talk towards the end of the day on the subject of bitcoin trading. He did warn, however, that making money buying and selling BTC for profit is not easy.
Yeh noted that it takes a certain amount of ebullience to trade bitcoin, saying:
“Money management is a very, very important thing when trading bitcoin. Cut your losses early, and let your gains run.”
Yeh talked about different strategies and tools that can be used to trade bitcoin. One tactic he discussed was technical trading with charts alone, and told the audience that his firm Binary Financial uses RTBTC to analyze technical chart information.
Another trading method for bitcoin that Yeh likes to use is fundamental analysis, trading on news developments. “Fundamental analysis could be [trading on] the NYDFS, or China news,” he said. “[But] be careful of bitcointalk and Reddit,” he added.
Yeh recomended using ZeroBlock, Google News or CoinDesk in order to find accurate information about developments in the cryptocurrency industry.
“Bitcoin’s price reaction to news is much, much heavier than a whale [large investor] coming in and buying bitcoin.”
During his Q&A Yeh added that commissions are a problem for investors who want to start out trading a small amount. A trader starting out with just a single bitcoin could suffer at the expense of cyrptocurrency exchange commissions, he said.
Check back in with CoinDesk tomorrow for a recap of Coin Congress Day 2.
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