Jack Dorsey and China go deeper in on blockchain

Finance Tips

The cryptocurrency industry just received backing from a big name. Twitter CEO Jack Dorsey, an outspoken cryptocurrency advocate, invested in a $10 million funding round for CoinList, a cryptocurrency startup designed to help companies raise money via digital token sales.

Dorsey is excited about the platform which could revolutionize how companies raise money:

“Crypto needs a trustworthy platform for launching new projects. CoinList leads the industry in that role, and trading is a logical next step,” said Dorsey, who has been a vocal bitcoin advocate.

The news is not all that unexpected. Dorsey is the co-founder of Square, which previously announced Square Crypto, a division of the company designed to facilitate digital currency transaction with a current focus on Bitcoin. This came after Dorsey vehemently denied his company would ever get involved with the Facebook cryptocurrency Libra, which he views as inconsistent with the ethos of digital currency as a whole.

China is no longer holding back in its vocal support for blockchain technology. In anticipation of the nation’s state-run cryptocurrency set to be released soon, the government is removing all online posts that refer to blockchain as a scam. President Xi Jinping gave a talk about how important blockchain will be to the country in the future, causing an immediate shift in blockchain advertising and media sentiment in the country.

Chinese cryptocurrency news source CNLedger tweeted updates of what unfolded as a result of President Xi’s talk:

Chinese cryptocurrency

Some direct consequences you might be interested in after President Xi’s blockchain talk.

1/ No doubt that blockchain is intensively reported on national TV channels, on covers/headlines of national newspapers and websites.

2/ China’s most popular app, Xuexi Qiangguo (study for becoming powerful nation) now has a recommended course focusing entirely on blockchain, which contains Bitcoin & Ethereum lessons. The app released by CPC to help ppl learn about its political doctrines like Xi’s thoughts.

3/ Articles saying blockchain technology is a scam are now BANNED.

Who still remember the days when posts promoting blockchain getting deleted real fast?

4/ Stocks related to blockchain spikes high. For example, Xunlei, a company selling cloud downloading services and claimed heavily invested in blockchain, just doubled its stock marketcap over the night.

5/ “Original Aspiration On-Chain”. CPC News, one of the most influential party media websites, released a tool using blockchain to help party members “remain true to the original aspiration”.

State-run media in China quickly clarified President Xi’s remarks as an endorsement of blockchain, not of Bitcoin. Yet, this didn’t stop Bitcoin investors from getting excited, as the price of BTC rose above $10,000 on the news.

A decline in Bitcoin prices from their 2018 highs still hasn’t stopped the cryptocurrency mining industry from moving forward. Canaan Creative, a Chinese cryptocurrency mining company, announced it was filing for an IPO in the United States to raise $400 million. If the IPO is approved, it would make Canaan Creative the first Chinese mining company to be publically traded in the United States.

According to the filing, Canaan claims its machines account for a significant amount of the total mining power on the Bitcoin network:

Bitcoin network

We were the second largest designer and manufacturer of Bitcoin mining machines globally in terms of computing power sold in the six months ended June 30, 2019, according to Frost & Sullivan. During the same period, our Bitcoin mining machines sold accounted for 21.9% of the combined computing power of all the Bitcoin mining machines sold globally, according to Frost & Sullivan.

Chinese mining competitor Bitmain has not abandoned its efforts to complete its own IPO, and is currently revisiting the prospects of a US IPO to raise between $300 million and $500 million to grow its business.

A new United States cryptocurrency bill differentiating security tokens and other cryptocurrencies is in the works. Republican congressman Tom Emmer wants the US SEC to only apply securities regulations to digital currencies that meet the standard definition of securities. This distinction has been argued over in US Congress, which has yet to provide firm guidance on the issue. Congressman Emmer acknowledged how unclear current regulations are for tokens:

US Congress

“Companies that have followed our current rules of the road, even if convoluted, deserve the certainty that they can offer their digital asset to the public and help contribute to a truly decentralized network,” he said during the testimony.

The US government did recently give some clarity on the tax status of cryptocurrency hard forks and airdrops. The IRS ruled that tokens obtained as a result of an airdrop or hard fork must report these new assets as income to the IRS.

Peter Van Valkenburgh of the cryptocurrency policy nonprofit Coin Center highlighted one of the rulings biggest problems, which is seen as negative for all cryptocurrency holders:

“That means that anyone who forks a blockchain can, without warning or notice, create new tax obligations for every holder of coins on the old chain. The same goes for airdrops. Any time someone airdrops a coin to an address over which you have dominion and control, they will create a tax reporting obligation on your part. This is a very bad result.”