News Fix: Old Banks Learning New Tricks

Bitcoin is often described as “digital gold.” That’s for good reason – the assets have a lot in common. As Adam Sharp wrote last year…

Both have the rare qualities that make a good speculative “store of value” asset.

Both are used as hedges against reckless monetary policy. They are assets that will likely rise in value if the old system becomes overloaded with debt (U.S. debt is at $21 trillion and counting) and is forced to “monetize” (print away) the debt…

Importantly, both assets can also be held by individuals. Stocks and bonds typically require a broker or bank to hold custody. This introduces “counterparty risk.” In other words, there’s always a small chance that the other party may go bankrupt and take some of your assets down with it.

Now bitcoin and gold prices may even be syncing up. Over the past three months, bitcoin has moved in tandem with gold. The correlation could signal that bitcoin is starting to behave more and more like a store of value and a safe haven asset.

The Winklevoss twins, founders of the Gemini crypto exchange, recently compared bitcoin to gold as well. Of all traditional investments, Cameron Winklevoss said, bitcoin is most similar to gold – a new store of value for the digital era. And the twins had to invest because they “couldn’t miss out on this future.”

Bitcoin and gold’s price correlation shows this attitude is gaining steam. Bitcoin isn’t quite mainstream yet, but it’s no longer on the obscure fringes of the financial world either.

Even Fed Chair Jerome Powell has taken notice. “[Investors] use [bitcoin] more as an alternative to gold,” Powell told the Senate Banking Committee in July. “It’s a speculative store of value.”

The global adoption of bitcoin is happening. And the gold bugs should pay attention.

On to the News Fix…

Cannabis

Utah lawmakers shrink away from state-run dispensaries: Utah’s relationship with medical marijuana has been a bit of a roller-coaster ride. In 2018, Utah voters approved Proposition 2, which legalized medical marijuana. But lawmakers quickly replaced Proposition 2 with a more restrictive “compromise bill.” A lawsuit against the compromise bill has been filed. The Utah Supreme Court rejected a petition challenging the compromise bill.

And now state lawmakers are preparing to eliminate the part of the law that required much of the distribution of medical cannabis to go through state and county health departments. Instead (and thankfully), lawmakers want medical cannabis to be sold through a network of privately owned and operated dispensaries (High Times).

Two federal officials call marijuana legalization a states’ right issue: Jim Carroll, who’s in charge of directing the Trump administration’s drug policies, said he considers marijuana legalization a states’ right issue. And Anne Hazlett, senior advisor at the Office of National Drug Control Policy (which has historically defended blanket federal prohibition), said legalization is a state decision (Marijuana Moment).

Carroll isn’t exactly a weed enthusiast, though. During a House Committee on Oversight and Reform hearing in May, he expressed concern about high THC potency in marijuana products. “The marijuana we have today is nothing like what it was when I was a kid, when I was in high school,” he said.

Study finds marijuana flower is best for pain relief: Researchers from the University of New Mexico have found that, among the variety of cannabis products on the market today, whole dried marijuana flower and products high in THC are the most effective for pain relief (Marijuana Moment).

The study used data from the Releaf app (developed by some of the study’s authors), which allows users to monitor their symptoms before, during and after consuming cannabis.

“Perhaps the most surprising result is just how widespread relief was with symptom relief reported in about 95 percent of cannabis administration sessions and across a wide variety of different types of pain,” lead author Xiaoxue Li said in a statement.

We don’t find that surprising at all.

Startups

Circle seeks general partner to raise a $100 million venture capital fund: Circle is hiring a new general partner to raise a $100 million venture capital fund. The fund will take advantage of the deal flow coming through SeedInvest, the equity crowdfunding portal Circle acquired in March (CoinDesk).

Blockchain startup raises $7.5 million from big banks in South Korea: Shinhan Bank, South Korea’s oldest bank, and Korea Exchange Bank, the country’s largest foreign exchange bank, have both invested in a South Korean blockchain startup called Blockco. Blockco raised $7.5 million (9 billion won) in the recent Series B+ funding round (Cointelegraph).

Blockco raised $1.2 billion from Samsung Ventures in 2016. It also participated in the development of a permissioned blockchain system called Nexledger in collaboration with Samsung Group and Amazon Web Services.

This is the latest development in a recent pattern. Shinhan and the Korea Exchange Bank have both been getting increasingly involved in blockchain projects. And if the oldest bank in South Korea is taking blockchain seriously, that bodes well for the technology’s adoption.

The next big tech trends, according to 174 startups: Writers at Forbes listened to 174 startup pitches at Y Combinator’s biannual Demo Day this week. So they gained some insight on current tech trends – or at least what entrepreneurs think they are (Forbes).

Some of the biggest trends? A focus on emerging overseas markets, trying to solve the housing crisis and tech startups trying to address startup saturation.

Crypto

Some Libra backers consider backing out: Facebook isn’t having a great week. A couple backers of its Libra digital currency project are reportedly considering calling it quits. Growing pressure from regulators seems to be freaking them out (CoinDesk).

“It’s going to be difficult for partners who want to be seen as in [regulatory] compliance” to be publicly supporting Libra, one of the companies told the Financial Times.

Overstock CEO resigns: Patrick Byrne, a rare pro-crypto breed among public company executives, has stepped down from Overstock. He was the company’s CEO and a member of its board of directors (CoinDesk). He said his resignation is due to insurability and other reasons after he admitted to a three-year relationship with a Russian agent who’s currently serving 18 months in prison.

Jonathan Johnson, the current president of Overstock’s blockchain initiative Medici Ventures, will replace Byrne on an interim basis. Byrne said Johnson is “prepared… to successfully oversee both our retail and blockchain businesses.”

SEC approves blockchain startup to record stock transfers: Securitize, a startup that provides technology for issuing blockchain tokens, has registered as a transfer agent with the Securities and Exchange Commission (SEC). That means Securitize can now be the official keeper of records about changes in securities ownership (CoinDesk).

“We can increase the amount of securities issued on the blockchain and give comfort to people that this is a regulated space,” said Carlos Domingo, co-founder and CEO of Securitize. “The SEC has also started approving other types of exempted securities like Regulation A+, and down the road those people will need transfer agents.”

Securitize worked on its application for about six months before submitting it to the SEC. And the SEC approved it in 10 days. It’s nice when the red tape doesn’t get in the way for once.

And finally… BitPay, a crypto payments processor, is under fire for rejecting a $100,000 donation to an Amazon rainforest charity. Apparently the payment failed to pass BitPay’s internal checks.

On the one hand, it’s good that it’s being vigilant. On the other, the rainforest is burning as we speak. It’s not a good look.

The Fix hopes that the charity gets the donation it needs. If you’d like to help (with your dollars or otherwise), check out a list of charities below.

Amazon Conservation
The Amazon Conservation Team
Amazon Watch
Rainforest Foundation

Allison Brickell
Assistant Managing Editor, Early Investing