Seeds of Wisdom RV and Economic Updates Wednesday Afternoon 9-25-24
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ETHEREUM IS A ‘DICTATORSHIP,’ CLAIMS CARDANO FOUNDER CHARLES HOSKINSON
Hoskinson says the Ethereum network is more like a “dictatorship” where Vitalik Buterin exerts too much influence over the development of the decentralized network.
Cardano’s Voltaire-era governance overhaul prevents it from becoming a “dictatorship” like Ethereum and sidesteps the “anarchy” of Bitcoin, its founder Charles Hoskinson said.
Speaking to Cointelegraph at Token2049 in Singapore, Hoskinson attacked Ethereum’s governance model, claiming it relies too heavily on its co-founder Vitalik Buterin for direction.
Hoskinson said that blockchains can elect to keep the protocol forever simple, like Bitcoin, or “pick a king” to run things. However, Cardano’s new governance model solves the “governance trilemma” of “efficiency, effectiveness and integrity” by using delegated representatives and a members-based organization called Intersect to distill complex governance topics down for a vote.
“If you have those three things, then you have a fair shot of avoiding the anarchy of Bitcoin or the dictatorship of Ethereum, and you actually have something that can move forward with one voice, but it’s still decentralized at the end of the day because it represents everybody.”
Pressed to explain his controversial remark comparing Ethereum to a dictatorship, Hoskinson stated that Ethereum’s “entire vision” starts and ends with the 30-year-old Buterin.
Hoskinson at Token2049 in Singapore. Source: Cointelegraph
“Everybody looks to him for the roadmap. Everybody looks to him for inspiration, and he’s also the only person who has enough power to rally people,” he said. “If you were to remove him from the equation right now, what’s the next hard fork going to look like, and how quickly can they actually get there?” he asked.
Hoskinson said Buterin was primarily responsible for altering the Ethereum roadmap away from sharding-based optimization of the base chain and toward rollups and layer-2 networks for scalability.
In recent months, the Ethereum roadmap has been heavily criticized for empowering “extractive L2s” as fee revenue and activity on the L1 dropped.
“Where does this idea of embracing layer 2s or rollups come from? Was it some random Ethereum engineer — or was it Vitalik Buterin writing a blog post about it, talking about it, and advocating for it?”
Although Hoskinson believes Ethereum is heavily influenced by Buterin’s vision, Buterin does not wield unilateral power in the decentralized network.
The blockchain uses a mix of offchain and onchain governance, including the Ethereum Foundation and community and stakeholder input into Ethereum Improvement Protocols, with critical decisions taken at core developer meetings. Contentious decisions can result in a hard fork, as happened with The DAO hack rollback that resulted in Ethereum Classic.
Hoskinson was one of eight original co-founders of Ethereum and CEO of the Ethereum Foundation, but his for-profit vision for the protocol clashed with Buterin’s and the young creator fired him from the project at a meeting in Switzerland in 2014.
While Hoskinson conceded that he had played a broadly similar role in shaping Cardano since 201, he said the network’s new governance model is designed to ensure that “Charles, alive or dead, doesn’t matter. There’s still going to be innovation on a daily basis.”
Cardano’s Chang hard fork in early September turned its Cardano (ADA) asset into a governance token, enabling holders to elect representatives and vote on development proposals and on funding for community projects. The founding entities that have guided the project so far — the Cardano Foundation, Input Output Global and Emurgo — can no longer trigger forks and upgrades.
Hoskinson said the interplay between the members-based organization of researchers and engineers — dubbed Intersect — and the delegate representatives is a much more “collaborative model” that functions with or without an active founder.
“They can talk to each other, vote, and come up with and use a blockchain-based government to ratify a roadmap on a regular basis,” said Hoskinson.
Cardano is still working on finalizing a constitution that will likely set hard limits on some core issues, such as supply and how governance works.
@ Newshounds News™
Source: CoinTelegraph
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IRELAND TO STREAMLINE LICENSING PROCESS FOR CRYPTO BUSINESSES
Ireland's Central Bank is enhancing its authorization process for crypto companies as the European Union prepares to implement the Markets in Crypto-Assets Regulation. Deputy Governor Derville Rowland announced this development during a speech at AFME's 8th Annual European Compliance and Legal Conference on September 23, 2024.
The authorization process, which crypto businesses must complete to operate legally in Ireland, involves regulatory approval of a company's financial stability, risk management systems, and compliance with anti-money laundering regulations.
Rowland stated, "We have been working to continually improve our authorisation process," adding, "Better risk assessment, better communication and better supervisory outcomes have been the output of that work."
This move comes as part of Ireland's preparation for MiCAR, a EU-wide regulatory framework for crypto-assets. MiCAR aims to establish consistent rules across EU member states for crypto-asset issuers and service providers. "We are working closely with our EU Peers and the ESAs to ensure the necessary coordination and consistency across Europe," Rowland said.
Rowland highlighted the significant potential of blockchain technologies: "We can see the many areas where the blockchain has significant potential to bring about positive change, even transformation, in how we do things. Whether this be tokenisation of investment products or improvements in post-trade infrastructure and interoperability, there are important positive stories to tell."
The Central Bank aims to strike a balance between innovation and risk management. "It is important that these benefits can be realised, whilst also ensuring that the risks are well understood and managed." Rowland also noted the key role of regulation: "Regulation plays a crucial role in the safe, and therefore enduring, adoption of innovation into the system."
Concerns Over Implementation And Compliance
While this move aims to simplify procedures, some industry representatives express concerns about potential challenges during implementation. "Talking about regulations in this industry is good, as governments are getting ready for mass-adoption.
The problem is, how will these regulations hinder development, and most importantly, deployment," says Daniel Logvin, CEO at LedgerByte. "Compliance is a very tough thing to achieve, especially when lots already have systems that work," Logvin adds.
"It provides increased regulatory clarity, which will help support institutional trust, investor confidence and consumer protection," notes Susana Esteban, Managing Director at FTI Consulting. However, she cautions that "It adds more compliance responsibilities (and potentially costs) for crypto companies and traditional financial entities working with digital assets."
Ireland's Potential As A Crypto Hub
According to an October 2023 article by Ben Strack in Blockworks, Ireland's appeal to crypto companies has been growing for years. The Irish government launched an "Innovation Hub" in 2018, facilitating engagement between fintech firms and the Central Bank of Ireland.
Coinbase opened its Dublin office in late 2018, while Gemini became the first Virtual Asset Service Provider (VASP) in Ireland in July 2022. MoonPay gained VASP status in August 2023, and Kraken received E-Money Institution authorization in September 2023.
"We welcome regulatory clarity and continued improvement and enhancements by regulators to adapt regulations to both protect users and markets but also balancing out the need to continue to foster innovation and growth," says Gracy Chen, the CEO of Bitget.
Certainly Ireland is always high on the list for innovative companies to be based there as a global financial centre, its membership and access to the European Union as well as its favourable business environment including its deep talent pool. This certainly helps to encourage crypto-companies to consider Ireland more seriously as a base."
"If Ireland pairs this with tax incentives or a business-friendly environment, it could become a hub for crypto firms, but this legislation is EU wide and it may have some competition for business," suggests Richard Lofthouse the Head of Risk and Data Science at InFlux Technologies.
Balancing Regulation With Innovation In EU
MiCAR regulates previously uncovered crypto-asset activities in the EU, including their issuance, custody, administration, and trading on platforms and exchanges.
"This could position the EU as a leader in crypto regulation, but being a leader in rules doesn't always translate to success in the market. It's important for the EU to find a balance between strong regulation and allowing room for innovation to stay competitive globally," Logvin states.
Esteban concludes, "Regulatory certainty can be a competitive advantage. MiCAR provides regulatory guidelines, which could make EU-based crypto businesses more attractive to institutional investors and partners, boosting their global credibility."
@ Newshounds News™
Source: Forbes
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GENSLER IGNORED DIGITAL ASSETS IN CONGRESSIONAL TESTIMONY BEFORE 4 HOUR GRILLING ON CRYPTO
Gensler defends SEC's stance on crypto amid congressional criticism over lack of clear regulations.
SEC Chair Gary Gensler faced criticism during yesterday’s congressional hearing over the agency’s approach to regulating cryptocurrencies despite omitting any mention of digital assets in his written testimony.
Lawmakers and SEC commissioners questioned the effectiveness and clarity of current strategies, highlighting concerns about “regulation by enforcement” and the absence of explicit guidelines.
House Financial Services Committee Chairman Patrick McHenry noted that the House had passed the FIT 21 Act to establish clear rules and robust consumer protections in the digital asset ecosystem. “More than two-thirds of the House, including 71 Democrats, rejected Chair Gensler’s approach to digital assets by supporting clarity and consumer protection,” McHenry stated during the hearing.
The FIT 21 Act’s definition of decentralization was a point of contention. Some lawmakers questioned whether setting a 20% ownership threshold and allowing anonymous self-hosted wallets could hinder enforcement efforts and regulatory oversight.
Commissioner Hester Peirce criticized the SEC’s reliance on enforcement actions without providing clear regulatory guidance. “It’s a very bad approach to trying to regulate an industry if you’re trying to protect investors,” Peirce said. She emphasized that this method is inefficient, leaving market participants uncertain about the SEC’s authority and compliance boundaries.
Commissioner Mark Uyeda echoed the need for the SEC to articulate how existing securities laws apply to digital assets. “The Commission, for instance, could have articulated, specifically in the context of crypto and digital assets, how you apply this test,” Uyeda remarked, referring to the Howey Test used to determine whether an asset qualifies as a security.
Despite these criticisms, Gensler maintained that current laws regarding digital assets are sufficient and explicit. Gensler asserted,
“Regardless of where somebody stores their ledger if they tokenize a security—an equity, a bond, or an investment contract—it’s important to make sure that the investors and the investing public have the disclosures they need.”
He argued that tokenization does not alter the fundamental economics of an asset being a security.
Concerns were also raised about the influence of celebrity promotions and potential “pump and dump” schemes in the crypto space. Representative Bill Foster questioned whether the SEC has adequate authority to address issues where influencers promote investments without disclosing compensation.
“I’ve heard concerns from industry participants about influencers, bloggers, celebrities, and others that use their celebrity status to promote investments without disclosing that they are, in fact, being paid to do so,” Foster said.
Gensler responded by saying,
“I would say I think the laws are strong. I mean, it’s always gaps in resources and we get, uh, on, on average a year 40 to 50,000 tips, complaints, and referrals. That’s, uh, What, 4, 000 a month or so.
And, uh, we, we have to prioritize those tips and complaints and referrals.”
The divide between the SEC’s current regulatory approach to crypto and the desire for more precise guidelines became evident throughout the hearing.
While some commissioners believe that statutory definitions from Congress are necessary, others argue that the SEC could utilize its existing authority more effectively to provide clarity for the crypto industry.
The SEC’s written and oral testimony centered on topics like cybersecurity incidents, conflicts of interest in securitization markets, and enhancements to public reporting and data transparency.
However, the agency’s omission of any direct references to cryptocurrencies in its testimony highlights the tension between its priorities and the concerns of lawmakers and industry participants seeking regulatory clarity in the rapidly evolving digital asset landscape.
The call for clear rules of the road and robust consumer protections remains a pressing issue, with stakeholders advocating for a regulatory framework that fosters innovation while safeguarding investor interests.
@ Newshounds News™
Source: CryptoSlate
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HOW PARAGUAY IS REDEFINING BLOCKCHAIN SOVEREIGNTY WITH LEGALEDGER – NO MORE GAS FEES!
▪️Paraguay launches Blockchain Chamber, promoting sovereign blockchain innovation for government, finance, commerce, civil, and military applications.
▪️Legaledger, built on Hyperledger and Besu, eliminates transaction gas fees for military and legal operations under law 6.822/21.
Paraguay has taken a significant step in the blockchain arena by establishing the Paraguayan Blockchain Chamber, aimed at fostering financial innovation on a sovereign blockchain.
The chamber’s spokesperson and director, Ricardo Prieto, discussed the initiative’s main focus: developing blockchain solutions for both public and private sectors, including government, finance, commerce, civil, and military ecosystems.
The project, named Legaledger, is built on the Hyperledger and Besu platforms, marking it as the world’s first third-generation blockchain network with national sovereignty. It uniquely features an exemption from gas fees for transactions involving military and legal security, in accordance with Paraguayan digital law 6.822/21.
Prieto highlighted Legaledger’s innovative fractal architecture design, which is the first to employ a dual blockchain mechanism (Hyperledger Fabric + Besu) and has the capability for regional and global replication.
“The Blockchain Network has an innovative fractal architecture design, the first with a double blockchain mechanism (Hyperledger Fabric + Besu) and regional and global replication capacity, thus achieving frictionless interoperability between all countries,” the director explained.
This design facilitates seamless interoperability across countries. He referenced a recent report from the Bank for International Settlements (BIS) on the risks and uncertainties associated with Distributed Ledger Technology (DLT), emphasizing the challenge banks face in conducting due diligence and supervision due to reliance on third-party blockchains. The BIS report suggests operating with sovereign blockchain networks to provide legal security within a country.
In 2021, Paraguay enacted Law No. 6.822/21 concerning trust services for electronic transactions, electronic documents, and transferable electronic documents – referred to as the Second Floor Digital Law.
“With the Law, we began to design Legaledger (powered by Hyperledger Foundation + HSM), the first Blockchain Network with national sovereignty, without gas payments, with legal security and with the ability to be replicated in any country in the world with perfect interoperability. Frictions between all participating countries.”
With this law, Paraguay began designing Legaledger, powered by the Hyperledger Foundation and HSM, creating the first blockchain network with national sovereignty that does not require gas payments, offers legal security, and can replicate in any country with perfect interoperability.
“The idea of creating a third-generation blockchain network arises from the need to offer legal security to procedures and transactions carried out on blockchain, something that is practically impossible in global blockchain networks”.
Another benefit of this initiative is the digitization of governmental, civil, and military judicial procedures, and the tokenization of financial assets and real-world assets (RWA), all with absolute legal security. This effectively eliminates identity theft and fraud risks, such as rug pulls, according to Prieto.
Challenges have since the project’s inception in 2021, particularly in tokenizing real estate assets. Discussions with legal advisors revealed potential fraud risks in the approach, highlighting the distinction between possession and ownership.
The public registry, which involves notaries and others to secure transactions on paper, ensures legal security for property ownership, which is not guaranteed by public blockchain tokens alone.
Legaledger is designed to be fractal and can be implemented across companies, conglomerates, states, and countries, maintaining interoperability for what is called sequencing, publishing procedures, or transactions, including international operations.
“No country in the world has the digital law that Paraguay has (Law 6.822/21), however, in many countries apartments and other physical assets were being tokenized that did not actually connect real rights with the tokens created on public blockchains, as we know this is very easy.
Each country has its Public Property Registry Agency, in which notaries and others participate, to control the operation that is carried out on paper, to provide legal security regarding the ownership of the object in question.”
To perfect tokenization with legal security, a unique digital law is necessary to allow digitalization of rights over tangible and intangible assets on a sovereign Blockchain network.
The resulting tokens must be managed and safeguarded within the network and can be bought, sold, or transferred digitally to anyone or any institution worldwide with legal certainty and without repudiation.
Ultimately, countries implementing a sovereign blockchain network with legal security will become an international digital jurisdiction, meaning the country will achieve a high level of procedure digitalization and asset tokenization within a legal framework and application scope without repudiation, concluded the spokesperson for the Paraguayan Blockchain Chamber.
@ Newshounds News™
Source: Crypto News Flash
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