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10 Observations from Satoshi Roundtable

Observations from this year’s Satoshi Roundtable — a small event attended by the top developers & executives in the the #bitcoin and #crypto community. I’ve tailored the summary for a general audience.

(1) HEDGE FUNDS have invaded the crypto market. No question a lot of hedge fund money is already in it, and family offices are buying now too.

(2) The PACE OF CHANGE remains dizzying and the recent price correction isn’t slowing it down at all.

(3) Lots of DEBATE about both the tech and the process of distributing tokens. I heard almost no “bitcoin vs. bitcoin cash” debate though, which was a relief. Old news, pretty much.

(4) Discussion about forming a FINRA-like SELF-REGULATORY ORGANIZATION for the sector.

(5) REGULATION is coming — lots of debate about how to respond to it and how much it will drive the sector out of the US. Biggest uncertainty remains around how to define custody, especially due to multi-sig and other technologies that don’t fit into an existing box.

(6) AUDITORS. There are a number of crypto unicorns now, and they’re maturing so starting to look for auditors. Consensus was that every audit firm is flailing because they don’t understand the tech. One audit firm will figure it out, break out and dominate the audit field for the sector. On a related point, there was a “show trial” of Bitfinex/Tether, as Tether had an issue due to auditor resignation. It was so clear to me that ALL AUDITORS are struggling with the sector, not just Tether’s auditor. Takeaway: auditors, up your game, and projects, make sure your blockchain can be audited.  Unauditable coins will wither and die if they cause exchanges and investors to struggle to get an audit opinion. They will drop your coin. When asked if the Tether show-trial made the audience feel better about Tether, more than half of hands went up. Not a single hand went up when asked if the show-trial made anyone feel worse about Tether.

(Addendum: auditability means the owner of the coin, such as an exchange or investment fund, is able to prove to its auditor that it owned the coin at a particular time picked by the auditor during an audit. Not all coins meet this standard. Auditability does NOT mean the coin is not private — means the coin is replayable so an auditor can verify that its client owned the coin at that moment in time.)

(7) HUGE CONTRAST between 2 household-name financial institutions, one of which is embracing bitcoin for customers and the other just did a compliance review of its wealth management customers and fired everyone connected to the industry. What a contrast. One of them is smart. The other is not.

(8) PUERTO RICO is the place to move if you’ve got big crypto gains.

(9) WYOMING: I spent a lot of time with crypto miners, who are already starting to set up shop in Wyoming where power is cheap enough to attract them — potentially en masse. The community is watching Wyoming’s proposed blockchain bills to see if Wyoming becomes a crypto haven — and the community is showing up in Cheyenne next week to show support. Thank you!! (Wyoming’s filings bill, incidentally, is HB 0101…a nice coincidence with the Roundtable’s poster pictured above!)

(10) SECURITIES: surprisingly little discussion, but consensus is that these will end up on public blockchains as SEC-compliant tokens do an end-run around the securities industry’s clearing and settlement infrastructure. The tech definitely needs more maturity so that won’t happen en masse this year.

Thanks to Bruce Fenton and team for organizing a terrific event!!

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Founder/CEO Custodia Bank. #bitcoin since 2012. 22-yr Wall St veteran. Not advice; not views of Custodia Bank!


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