CoinMetro 7th September Notes

IN THE NEWS

#1 Cryptocurrency Airdrops at Serious Risk of Regulatory Scrutiny 

• SEC jumped on a company that gave away free airdrop and hit them with a cease and desist.
• There are no token laws anywhere in the world, just regulations.
• Regulators look at existing regulations and guidelines for securities, and apply it to crypto.
• The word token should be removed from how you look at it. If it can be defined as a security, it needs to be thought of as a security.
• We need legitimate frameworks for speed of adoption and better overall health of the crypto space.
  

#2 UK insurance market leader Lloyd’s of London will insure a crypto custody platform by US-based custodial firm Kingdom Trust

• Insurance companies don't understand crypto, but they may very well be a dream situation for insurance companies.
• This is because crypto assets are stored on hardware and are eminently traceable. They can create a system to track when the funds/device are accessed, so it's easy to protect and define.
• Lloyd's of London is usually among the first to adopt new facets of life to insure, such as a supermodel's legs.

#3 SEC to loosen the requirements to become an "accredited investor"? 

• They are looking into ways to streamline the process.
• The real issue is why did the SEC set these requirements in the first place?
• The amount of money that people have does not make them more financially savvy.
• The SEC hasn't said how they would do this.
• The arbitrary numbers need to change to instead be a proficiency test instead.

#4 Japan's regulatory body FSA putting some new rules in place for crypto exchanges, to protect the consumers from scams & hacks.

• Changed to increase the amount of questions you must complete from around 200 to around 400.
• This is not really a helpful metric to protect consumers.
• Kevin is pro-regulation, but that doesn't mean that the regulations are always good or smart.
• A better way to protect the consumer is to educate the consumer, rather than the exchanges.

#5 Hackers Breach MEGA Chrome Extension To Steal Crypto Private Keys 

• Kevin will be adding this to his ongoing list of hacks.
• It's all about protocols.
• When your business model revolves around holding people's assets, the most important thing to do is to keep those assets safe.
• Don't use Chrome extensions (MetaMask has been good up until this point, and is likely the safest).
• When you give your money to third-parties, make sure you know what you are getting into and verify what they do to protect it and how.

#6 Goldman Sachs drops bitcoin trading plans for now | Business Insider

• Most institutional players were happy about this.
• GS is notorious in the FX space for some of the practices they use.
• This causes sell pressure, as well as the fact that ICO's are no longer holding their raised funds in crypto.
• "Dumb Money" follows the news, but they misunderstand the news or they read too much into it. This pushes the market to an extent that the impact of the news should not actually have in a mature market.

#7 EU Lawmakers Weigh 'Standard' for ICO's Under Crowdfunding Rules 

• Meeting going on today with EU finance ministers that may bring some talking points, but not any real regulations. This is for them to learn and discuss.
• ICOs are not crowdfunding i.e. Kickstarter
• While the regulator wants to be careful to not destroy the market, they also want to be careful not to destroy their own reputations and allow fraud and unlicensed security trading.

#8 Someone Took Out a $74 Million Short on Bitcoin Right Before the Drop 

• This drop was coming.
• We could see sub 3000 before things get better.
• BTC has held up better than ETH up to this point, as ETH has more direct competitors.
• ETH does not have a limited supply.

#9 ShapeShift Ends Anonymity With Announcement of Mandatory KYC Data Collection

• "I told you so."
• Even decentralized exchanges will at some point require KYC.
• You cannot allow money to change hands without proper identification of the client.

REDDIT QUESTIONS

Last AMA you said there were no significant regulations yet in crypto. By now, aren't you considering the -non existing- regulations a bit too much? You can take them into account as much as you can and meet and converse with 100s of regulators until 2075. But at some point, you will have to cut the ribbon. Probably next month, another unforeseen regulatory hurdle pops up anyway.

• CoinMetro will make sure they license fully. The future is what counts, and being compliant is the way to create a long lasting business.
• From a commercial standpoint, we cannot burn capital indefinitely without going live. At some point the ribbon will be cut.
• There was a board meeting this week on how to utilize fiat currency.
• There are long lengthy jail sentences if things are not done the proper legal way.
• CM will still be on the regulatory hunt moving forward.

You said last AMA that during Q4 CM will start to bring "pieces of the infrastructure" live. By pieces do you mean simplex, intermediate and trade view? What order will these pieces be launched in?

• Similar to the Beta, it will be Simplex, then intermediate, then tradeview.
• September 25th is currently the internal goal to get these 3 items into the Open Beta.
• Some days before pushing it live once it is ready internally. This allows for time to market and make sure that people are aware of it.
• This same path will be followed when these things are launched live.

At what point, relative to things going live, will XCM be tradeable?

• XCM will be tradable right before launch publicly. It needs to be tradable in order to be fully live.
• We want to try and create a hype cycle and put value behind the token. Utility token needs to have a utility.
• It won't be day one when things go live, but they need to push as much use behind the token as possible.

When your trading margin you want the books tight, will you be looking to bring on more liquidity providers before you launch margin trading?

• The books are already quite tight, but yes before margin trading is pushed, the team will do what needs to be done to make the market function smoothly.
• Eventually this deep liquidity will be available to all.

At the moment from what I understand CM is using custody solutions like BitGo for wallets. Is CoinMetro going to be using custodian services exclusively or will CoinMetro have their own wallets for some coins?

• CoinMetro does use BitGo, but do not use their custodial services.
• They do not provide access to every token. There may be tokens or coins that CoinMetro will list that will not be covered through BitGo.
• Another liquidity provider also offers more custodial services.
• CoinMetro will look to partner with custodial services until they have the ability, the time, and the team to create their own.

Will coins that aren't businesses e.g. Dogecoin, be listed since obviously they can't go through the standard listing process and don't have CEOs etc. On a side-note I think Dogecoin would be a very good coin to list, noobs love it because it is "cheap" and fun, same from a regulatory point of view as Bitcoin and it's been getting great volume recently.

• Definitely possible.
• It comes down to a vetting process as well as volume in order to curtail market manipulations.

Would you rather be remembered as:

1) a guy who made a very lucrative and respected financial platform or

2) a guy who helped shaping the regulatory framework that transitioned crypto towards a mature phase

• If Kevin had to pick between the two, then the second.
• Can't have a lucrative AND respected platform without following best practices and regulations.

So, Kevin, what’s up?

• Meeting with many different projects in the Tallinn office, sort of like a "Pre-ICO Express"
• Helping a company formalize a token structure around real estate that provide access tokens that are not classified as securities that give bonuses in the way of tokens.
• Heading to London Monday to meet with several different providers and partners. Specifically regarding debit cards, eMoney, and he will also be see FCA.
• Then to Berlin on Tuesday to another provider.
• "I don't really have a personal life".

Hi Kevin, if there is a last flash sales again, will the contributor be able to buy XCM token directly using euro ? For a non-resident of SEPA country, how can this be done ?

• Not if it is set up in Hong Kong again.
• If we do it from Estonia and have approval from the bank, then we could do so in both SEPA and non-SEPA zone.
• Ongoing talks, haven't been escalated yet.
• Head of legal starts next Monday, and he will be looking into this. But the team wants to be sure it will happen before taking the time and money to explore options.

Will we have margin trading on day 1?

• No.
• September 15 is when the project itself to bring in the functionality of margin trading will begin for back end, front end, and GUI development.
• Aim to have margin trading within 30 days of public Live Beta launch.
• A one-off exchange is not a money making business.

If someone registers right now and then contributes in the flash sale. Would they get closed beta access? Or have to wait until public anyway?

• It depends.
• Currently there is a number of different criteria for access. This includes a certain amount of XCM purchased, as well as engagement and date of joining the CM family.
• Open Beta will be open to every member of the CoinMetro family. Contributors get access immediately
• This is something that will be discussed in further detail in the coming board meetings.

The fee system (paying fees in XCM even when you don't have any) is quite unique. Did you patent this system? I haven't seen any other exchange plan to use it so far.

• Not patented yet, but this will be looked into by the legal team soon.

What’s the current sprint goal?

• Team really likes Trello.
• What's being worked on now: Exchange C++ Core, Exchange back end, Continuous improvement for the C++ core, chain analysis, and much much more.

Hi Kevin, I’ve had a look at the ‘Trade’ (TV3) platform mockup and it looks good however it seems this platform only caters to margin type trading. Are we going to have a trade platform (that looks like the mock-up) that caters for exchange type trading (like Binance style trading).

• Does not cater to margin trading.
• You will have basic trading wallet, and margin wallet.

Can you point out what makes CoinMetro to stand out from the crowd and why? In plain and simple terms please :)

• Tokenized Asset Management does not exist in this form yet in the market.
• ETCF, this allows tokens to get some easy liquidity out of ICO and easier diversification options.
• Debit card.
• 3 different trade systems for different levels of expertise.
• Margin trading to loan and borrow capital and leverage.
• Licensing.
• A holistic approach to education and support for customers.

COINMETRO UPDATES

• Development, marketing and support are starting to ramp up.
• About 2,400 people in Beta, and will be pushing that up to around 7,000 near the end of the month.
• Trade mock up is going around in the next 7 days or so.
• And more.

LIVE AMA

The Goldman news was actually fake news. They only plan to delay it, not scrap the whole thing

• Need to control risk, and that does not change with crypto.

There are quite a lot of issues on the beta, even with the regulatory set back I feel Q4 might not be possible? Thoughts on this?

• Feedback collectively is very important.
• Even if we see things that might need corrected, the it may still be pushed out for feedback because sometimes it's not a priority to the community.
• There are also small issues that might be ignored in order to save time for larger potential issues at this stage.
• We are prioritizing. As the team grows, the scope of the priorities will grow as well.

​One of the proposals was to cap token sales at 8mil EUR. Do you think the days of very large token sales are over?

• Capping is stupid.
• If there are caps like this, then projects will not do ICO, and instead will find a different way to raise their money.

Can we safely store our tokens in our account in the Homepage?

• Tokens have not been minted yet, so they are completely safe at this time.
• There have been a couple instances of bad actors achieving access to the accounts, but that was able to be logged and dealt with swiftly.

What does it still need to open the exchange? Any licensed or just development? What is needed?

• Some development, but licensing is already obtained.
• Collecting feedback helps us create a better product for when we move to market.

There's a general downbeat mood about prices at the moment... are you more concerned about a lack of adoption? Without adoption, people need to cash out for services which leads to sell pressure etc.

• Trying to get adoption and get Starbucks to accept Bitcoin is not a great solution. This is because there are still other options to purchase these things. The only people who would use such are people who already own Bitcoin.
• What is really needed for adoption is a regulatory standpoint that then pushes into custodial. This will allow easier on and off ramp access to crypto.

Will the debit card launch this year?

• Yes it is still on track to launch this year.
• We were in talks with 2 different providers, and are now actively in talks with 4 providers.

The AMA video's garner a few 100 viewers altogether. While any miseducated idiot shilling a crap coin gets thousands easy. Does it bother you that your audience is much smaller? No plans to push some marketing behind the video's? Since such transparent and informative weekly video's are a rare gem in the world of crypto.

• Yes, it bothers Kevin but not because he want's the exposure. It's because people get hyped up and might not be learning about crypto in a productive way.

The Beta is looking great... when will advanced version be ready?

• Simplex and Intermediate is out. Trade view should be out in the next 7 days.

Hi Kevin, will STO tokens be tradable on CoinMetro? e.g. TOWER Holdings will offer a token sale for redevelopment of an Island Resort on the Great Barrier Reef called GKI tokens, massive project.

• They are all securities.
• Under Estonian guidelines CoinMetro will not list initially a security token as defined by the FSA.
• Kevin and CoinMetro are in continual talks to help define what a security token is.
• Short answer yes, but not on Day 1.
• It all depends on how the yield is paid and structured.

When moon?

• Kevin will where a astronaut suit for the AMA when we reach it.

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That sums up this week's AMA with CoinMetro Founder Kevin Murcko! Please join us again next week on CoinMetro's Facebook at 2PM GMT for another round and make sure you submit your questions to the CoinMetro Subreddit!

As always, we're available to answer any questions you may have on our Telegram Group 24/7.