Crypto Assets to Be Regulated Differently in the US, Potential Impact on Industry

The United States government could regulate crypto assets and tokens differently than stocks and traditional assets by altering the existing regulatory framework on securities.

On Dec. 22, CNBC reported that two congressmen — Warren Davidson and Darren Solo — have introduced a bipartisan bill entitled “Token Taxonomy Act,” in an effort to prevent over-regulation in the cryptocurrency space.

“In the early days of the internet, Congress passed legislation that provided certainty and resisted the temptation to over-regulate the market. Our intent is to achieve a similar win for America’s economy and for American leadership in this innovative space,” said Davidson.

When passed, what sort of impact could the bipartisan Token Taxonomy Act have on the cryptocurrency and blockchain sector?

More clarity, exactly what the industry needs

In a statement, the Blockchain Association — a Washington, D.C.-based non-profit trade association that represents many of the biggest companies in the cryptocurrency industry such as Coinbase, Circle and Digital Currency Group — said that the bill provides a definition to crypto assets and digital tokens that exclude them from being recognized as a security.

Throughout the past two years, many blockchain projects have left the U.S. market to pursue token sales in regions like Switzerland and Singapore, which have lenient and flexible policies regarding initial coin offerings (ICOs).

By providing a clear guideline on the regulatory nature of tokens and digital assets, the bill encourages blockchain projects to remain within the U.S. market and contribute to the growth of the local cryptocurrency and blockchain sector.

The vast majority of token sales and ICO projects — apart from a select few like Telegram that have reportedly conducted a private token sale with the approval from the U.S. Securities and Exchange Commission (SEC) — have disallowed investors in the U.S. to participate in token sales due to the ambiguity in existing securities laws.

Even projects such as 0x (ZRX) that have been listed by a U.S.-based strictly regulated cryptocurrency exchange Coinbase, which clears the project from being considered a security, did not allow investors in the country to contribute to the ICO.

“With these terms clarified, we can police bad actors while encouraging the good ones, giving US-based innovators the framework they need to build next-generation technologies and services here rather than doing that valuable work overseas,” the Blockchain Association said.

The bill also offers clarity on the taxation policy surrounding cryptocurrencies for the first time in the market’s history, eliminating the friction between blockchain networks and users.

Currently, users in the U.S. are required to declare capital gains taxes on all cryptocurrency transactions — small or big — because the Internal Revenue Service (IRS) of the United States federal government has recognized cryptocurrencies as a form of property.

Although the bill does not aim to alter the recognition of cryptocurrencies as a property, it imposes an exemption for capital gains taxes on transactions that do not exceed $600, deeming them as tax-exempt exchanges.

The Blockchain Association added:

“Also, this legislation includes provisions that would address issues with the tax treatment of tokens. In 2014, the IRS declared that ‘virtual currencies’ be treated as property, which means capital gains taxes need to be calculated for all transactions. This adds tremendous friction to decentralized networks. The legislation addresses this by providing a de minimis exemption for gains less than $600 and allowing for tax-exempt like-kind exchanges.”

Decentralization is key

The bill does not encourage the SEC and other enforcement agencies to acknowledge all types of tokens and ICO projects as non-securities. It still allows the SEC to exercise authority over tokens that are considered securities, based on a newly established definition and guideline.

On June 14, the SEC’s Director of the Division of Corporate Finance Bill Hinman said that a key factor in determining whether a token is considered a security under existing regulations is the level of decentralization of the project.

If a blockchain network is sufficiently decentralized and no central party has control over the majority of the project’s elements, including its monetary policy and development, the SEC director said in a speech that the native token of the blockchain network cannot be considered a security under existing regulations. Hinman said:

“If the network on which the token or coin is to function is sufficiently decentralized – where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts – the assets may not represent an investment contract. Moreover, when the efforts of the third party are no longer a key factor for determining the enterprise’s success, material information asymmetries recede.”

On that front, the SEC and the lawmakers behind the bill are in agreement that, as long as a security is sufficiently decentralized, it should be able to continue on without the interference from the authorities.

When passed, the bill is expected to allow both the token issuers and investors to better evaluate whether a token is recognized as a security or not, based on the newly amended securities policies. The bill could also encourage more companies to register with the SEC to distribute securities through the issuance of tokens in a private sale.

In the upcoming months, the Blockchain Association, the companies represented by the non-profit organization and U.S. regulators are set to cooperate in improving the bill and move it forward to gain the approval from the House and the Congress.

For a bill that has only been in the making for several months, the Blockchain Association said that it is not perfect in many ways. But, throughout 2019, industry leaders, experts and lawmakers will work together to solidify policies surrounding the cryptocurrency and blockchain space.

“Like all legislation in the early stages, we expect this bill isn’t perfect yet. However, what excites us is that it was proposed by a bipartisan team, demonstrating a vision for innovation and responsibility that is shared across the aisle. With the new Congress starting in January, we hope digital tokens will be an idea that we can build upon. We want to work together to debate the key issues, ensure adequate consumer protection, and work toward advancing legislation that represents our collective views,” the association stated.

Crypto tax policy reform needed

Cryptocurrencies like Bitcoin are fundamentally, structurally and conceptually different than stocks and traditional forms of assets. As such, the Bitcoin market behaves and moves differently than most stocks with extreme volatility and rapid price movements, mostly because the market is open for 24 hours a day for investors in the global digital asset exchange market.

The problem with cryptocurrencies — or with any emerging asset class in its infancy — is that an investor could record a 300 percent gain on paper by the year’s end and lose all of the profits in the following year.

Because losses are not carried across to the next year and crypto taxes are calculated in the same way as stocks and properties, the mismanagement of a cryptocurrency portfolio could lead to a big tax bill for investors.

On Dec. 21, the Wall Street Journal reported that investors could use certain strategies to lower taxes on cryptocurrency investments, such as selling and repurchasing crypto assets.

Without the implementation of such strategies, the aggressive approach of the IRS to collect taxes from crypto investors — as seen in the federal court order that demanded Coinbase to provide information on about 13,000 cryptocurrency trading accounts worth more than $20,000 between 2013 and 2015 — could affect many investors in the future.

Currently, the IRS is evaluating tens of thousands of trading accounts that traded between 2013 and 2015 to potential charge capital gains taxes on cryptocurrency investors. Investors that do not have the know-how on reducing tax rates could get hit hard by the IRS in the future, especially given that the tax policy around crypto remains identical with that of stocks and properties.

If the bill gets passed and a new definition is provided to crypto assets, most areas of the asset class, including taxation, are likely to be altered.

From 2017 to 2018, Bitcoin increased by around 1,900 percent, from $1,000 to $19,500. Since then, Bitcoin has dropped to $4,000 by around 85 percent. For an asset class that tends to increase and decline in value by margins that are not comparable to the stock market, it is impractical to rely on the same tax policies.

Even major projects are shutting down

On Dec. 13, Basis — a stablecoin project financed by some of the largest venture capital firms in the world, such as Andreessen Horowitz and Bain Capital Ventures — announced that it will shut down its operations and return the $133 million it raised to its investors.

Dissimilar to other widely adopted stablecoins like Circle’s USDC and Gemini’s GUSD, Basis incorporates an algorithm and alters the supply of the token to adjust to the price of other major crypto assets, like Bitcoin and Ethereum.

In an official statement, the Basis team said that, ultimately, the closure of the project came down to the securities law of the U.S.

“As regulatory guidance started to trickle out over time, our lawyers came to a consensus that there would be no way to avoid securities status for bond and share tokens (though Basis would likely be free of this characterization). Due to their status as unregistered securities, bond and share tokens would be subject to transfer restrictions, with Intangible Labs responsible for limiting token ownership to accredited investors in the US for the first year after issuance and for performing eligibility checks on international users.”

Based on the statement of Basis, it is likely that the SEC and the lawyers of the project deemed it was not sufficiently decentralized, as the development is led by a team of developers hired by the company.

Basis was considered a promising algorithm-based stablecoin project. But, inefficient regulatory frameworks and securities policies that consider crypto assets in the same way as stocks and traditional assets limited the scope of the project.

For the long-term growth of the cryptocurrency sector, the bipartisan bill is crucial in defining cryptocurrencies in a new manner to facilitate the development of blockchain technology and encourage innovation in the space. Jake Chervinsky, a government enforcement defense and securities litigation attorney at Kobre & Kim, said:

“The Token Taxonomy Act would provide exactly the type of regulatory clarity the crypto industry needs. Legislation like this is orders of magnitude more important than non-binding guidance from agencies like the SEC.”

While the time frame of the approval of the bipartisan bill is uncertain, industry leaders and experts remain generally optimistic in the first initiative led by the members of Congress to regulate cryptocurrencies efficiently.

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Hong Kong's New Regulation ‘Might’ Be Harmful for Local Crypto Industry, Experts Say

New regulations for crypto-related companies, which Hong Kong’s Securities and Futures Commission (SFC) announced earlier , might prevent crypto entrepreneurs from entering the market. Expert comments on the situation were reported by business media Nikkei Asian Review on Monday, Dec. 17.

Timothy Loh, owner of a local law firm, told Nikkei that some entrepreneurs might decide not to participate in the new framework in order to “maintain their current shares in the market.” “The requirements of the SFC initiative may prove too burdensome for some operators,” he added.

Other speakers cited by Nikkei believe that higher trading costs could discourage institutional investors from entering the market, which could work against the plans to stabilize markets with their presence. However, the counterargument is that a stricter policy may lead to greater investor confidence, Nikkei notes.

The SFC first announced the new regulatory framework in November. The guidelines compared cryptocurrency exchanges to existing licensed providers of automated trading services, pointing out that they also need to protect investors.

Moreover, the SFC has major concerns about money-laundering cases and fraud, which have prompted the regulator to introduce new legislation. It will likely be applied to exchanges, traders, investment funds and other crypto-related businesses.

Under the new guidelines, investment funds are obliged to obtain a license from the SFC in the event that more than 10 percent of their assets consist of Bitcoin (BTC) or other cryptocurrencies. Moreover, in this case, they will be allowed to sell products only to professional investors.

Before applying for a license, crypto entrepreneurs can participate in a “regulatory sandbox” to test their solutions.

The new regulation also refers to initial coin offerings (ICO), Nikkei reports. For example, all tokens have to fulfill the SFC’s requirements and are obliged to have existed for at least 12 months before an ICO is launched.

Hong Kong is known for its significantly more lenient approach toward cryptocurrencies in comparison to mainland China, which upholds an effective ban on crypto activities. According to a recent report published by CryptoCompare, the highest quantity of top exchanges is still located in Hong Kong (10) and Singapore (11).

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88% Of Crypto Exchanges Want Industry Regulation, New Study Reveals


Lithuania-based crypto payment company Mistertango has released a study which reveals that 88% of cryptocurrency exchanges want industry regulation. The study was based on responses from 24 crypto exchanges across the world with a total daily trading volume of over $100 million. The responses show an industry that wants to be part of the formal system, not outside of it — contrary to public perception.

Cryptocurrency Exchanges Want Regulation

The study reveals that 88% of crypto exchanges want regulation, as they believe it could stabilize prices and create a level of certainty that the market has not experienced for a while.

Mistertango Business Manager Gabrielius Bilkštys said the market needs regulation more than ever as it would create the required level of stability investors crave.

“The industry is crying out for regulation, and the response from partners has shown this. Uncertainty is the biggest fear, and regulation is critical to provide the stability we need. Unfortunately, there is no regulatory consensus – worldwide or otherwise. For cryptocurrencies to move towards the scale and ubiquity possessed by fiat currency, it needs cohesive, considered and comprehensive regulation. Thus, regulation will be a catalyst, not an inhibitor to the crypto market development.”

Regulation could solve some of the threats that have plagued the market in the past, but some fear that too heavy a hand could also destroy the market. Seventeen percent of respondents said that they believe “overly strict regulation is the biggest threat to the cryptocurrency.” We’ve witnessed scenarios where regulators came down hard on exchanges. This has become quite popular in Asia, where trading has been shut down in the past, which led to extreme price volatility.

Oleksandr Lutskevych, CEO of CEX.IO — one of the top crypto exchanges based on market volume — believes the market will mature better when it’s regulated.

He said:

“Until now, the industry has not had its say on regulation. It has been widely supposed that crypto companies want to avoid a regulated environment, but this is far from the truth. The industry is all too aware that regulation will lead to the maturity of the market and ensure businesses remain free from suspicion of involvement with illegitimate uses of cryptocurrency.”

Banking

Merrill Lynch Bitcoin Fund
Exchanges hope that new cryptocurrency regulations could make it easier for them to form banking partnerships.

While anonymity — or in the case of most cryptocurrencys, pseudonymity — has been one of the biggest allures of the market, 55% of respondents are willing to beam the light on customers trading on their platforms using KYC/AML checks, as is done with traditional financial services, in a bid to make crypto free from illegal uses.

Some of the respondents believe the banks hold the aces when it comes to crypto adoption. About 40% of crypto exchanges in the study think “reducing barriers to funding crypto activity by banks will improve acceptance.” This is one of the factors driving adoption in South Korea, known as one of the largest markets for cryptocurrency trading.

Shinhan Bank, the second largest bank in the country, provides local exchanges with virtual bank accounts, which traders can also use to withdraw and deposit without having to use their actual bank account. The respondents believe a change in the attitude of banks will have a massive impact on the global acceptance of cryptocurrency but that this can only be achieved if the industry is regulated.

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Pegasus Coin: Redefining the Horseracing Industry through Blockchain


This is a paid-for submitted press release. CCN does not endorse, nor is responsible for any material included below and isn’t responsible for any damages or losses connected with any products or services mentioned in the press release. CCN urges readers to conduct their own research with due diligence into the company, product or service mentioned in the press release.

The firm behind the Pegasus Coin, the Kazakhstan Horseracing Association, hopes to revolutionize the equine industry in more ways than one.

KHA aims to construct the world’s largest cryptocurrency-based integrated facility development in the form of a 113-hectare Horseracing Park, and to develop an open source, fully decentralized and distributed ledger through which horse enthusiasts will be able to access and share information on horses, all of which will primarily utilize Pegasus Coins.

KHA was formed in 2012 as the first horse racing association in Kazakhstan that has been approved by the Ministry of Justice of the Republic of Kazakhstan.

Since their founding, the firm has obtained legally binding and valid government gambling licenses and land rights, as well as MOUs with key parties such as the JRA (Japan Racing Association) and COMPLANT (China National Complete Plant Import Export Corporation) in their quest to develop a world-class horseracing integrated facility.

The land (estimated to be worth 53 million US dollars based on a CBRE report) in which the integrated facility is built upon, is located in Kazakhstan’s Golden City, 20 kilometers from Almaty.

COMPLANT is expected to begin construction in the first quarter of 2019. The development will consist of an amusement park, shopping center, convention center, hotel development, VIP villas, state-of-the-art horse racing facilities that will cater up to 700 horses, and a host of other different properties.

Bettors have traditionally encountered difficulties carrying money across borders due to governmental restrictions, junket fees and security risks. The Pegasus Coin effectively solves all of these issues; enabling limitless transfer of funds at low transaction costs.

Payments within the entire facility will be able to be processed through their all-in-one PegasusPay wallet. The wallet will allow quick and easy contactless transactions as well as swift exchange between different currencies in one personal account. By combining usability with a high level of privacy, anonymity and security, users will feel secure using the wallet on multiple electronic devices.

The underlying blockchain technology will also be used to develop an open source, fully decentralized and distributed ledger through which horse enthusiasts will be able to access and share information on horses.

KHA has also implemented various features to encourage price growth, such as the burning of unsold tokens at every stage of the token sale, as well as a variety of velocity-reducing mechanisms to incentivize the long-term holdings of Pegasus Coins.

Another major feature is the “burnback” scheme. KHA will be using earnings from the park to buy back Pegasus Coins from the market and burning them. The “burnback” scheme is Pegasus Coin’s way of rewarding its community and shareholders; by decreasing coin supply, preserving coin value, increasing demand and ultimately promoting exclusivity for it.

With the launch of their 9-week token sale beginning on the 27th of August, many eagerly await to see the impact that the Pegasus Coin will have on the global cryptocurrency community.

There has yet to be a cryptocurrency that has truly been utilized in everyday physical transactions. Bitcoin transactions currently consist of a severely disproportionate percentage compared to its genuine purpose of being the currency of the future, with most Bitcoins purchased purely for speculative reasons.

The Pegasus Coin, however, seems to take a refreshingly different approach compared to most ICO concepts; focusing on establishing its physical usage as a first priority, unlike other cryptocurrencies that hope to attain physical utility at some point in their future roadmap.

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Vietnam's Securities Regulator Warns Industry to Avoid Crypto Activities

Vietnam’s securities regulator has warned industry companies and funds in the country to avoid activities related to cryptocurrencies.

In an announcement this week, Viet Nam News reported Wednesday, the State Securities Commission (SSC) said firms should avoid issuance, transactions or brokerage of cryptos, adding that they must observe laws on money laundering.

The warning relates to an April 2018 Prime Minister’s Directive on strengthening the management of activities related to cryptocurrencies. Vietnam banned the use of cryptos in payments in October 2017, as CoinDesk reported, despite suggestions earlier that year that the prime minister might legally recognize bitcoin for that purpose.

Back in April, the country’s central bank, the State Bank of Vietnam, also banned commercial banks and payment service providers from making transactions with cryptocurrencies, arguing that such activities could increase the risk of money laundering, terrorism financing and tax evasion, Viet Nam News states.

In a further move aimed to restrict crypo activities in the country, the central bank last week supported a move to block, at least temporarily, the import of mining devices into the country.

The suspension was initially proposed by the Ministry of Industry and Trade in June, which argued that, since cryptocurrency miners are not on the list of prohibited imports, it has become difficult for local authorities to enforce current restrictions on cryptocurrencies.

Ho Chi Minh City image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.

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Vietnam’s Securities Watchdog Bans Industry from Cryptocurrency Activity: Report


The State Securities Commission of Vietnam (SSC), the country’s stock market watchdog, has reportedly forbidden industry firms from engaging in cryptocurrency-related activities.

Vietnam’s official state news agency is reporting that the country’s securities markets watchdog has ‘required’ the industry to not partake in “any issuance, transaction or brokerage activities related to cryptocurrencies” in a circular to all relevant institutions.

‘Under an announcement released early this week, SSC banned public companies, securities companies, fund management companies and securities investment funds from taking part in the activities,” an excerpt from the news report added…’and required them to obey legal regulations on anti-money laundering.”

At press time, the announcement enforcing a ban of cryptocurrency-related activities among companies within the sector could not be found on the SSC’s official website. The most-recent related investor notice was published on May 2, 2018, with the regulator warning investors to be cautious of investing in cryptocurrencies. The notice also urged industry firms including brokerages and asset managers to refrain from any cryptocurrency transactions until a legal framework is released.

According to the report, the SCC explains that its ban is in response to a directive [PDF] by the office of Nguyen Xuan Phuc, Vietnam’s Prime Minister on April 11 ordering several ministries, law enforcement authorities and the country’s central bank to strengthen the management of “activities related to bitcoin and other cryptocurrencies.”

That particular directive was a direct consequence of an unprecedented nationwide scam involving two fraudulent initial coin offerings (ICOs) that swindled 32,000 Vietnamese citizens out of a massive $660 million.

At the turn of 2018, a new legal framework came into effect outlawing cryptocurrency’s usage for payments in Vietnam. The prohibitive stance also sees adopters facing criminal prosecution with fines up to $9,000.

Last week, the State Bank of Vietnam, the country’s central bank, agreed with a government ministry’s proposal to suspend imports of Application-specific integrated circuit (ASIC) cryptocurrency mining equipment.

Featured image from Shutterstock.

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Newly Created Industry Group Initiative Aims to Address Bitcoin Scalability Issues

A team of Bitcoin engineers has announced the launch of the Bitcoin Operations Technology Group (Bitcoin Optech) addressing the problem of Bitcoin’s scalability, according to their statement published July 20.

Bitcoin Optech is a non-profit organization backed by leading industry players like Xapo CEO Wences Casares, executive of Kohlberg Kravis Roberts & Co. Ltd John Pfeffer, and New York-based cryptocurrency research and development group Chaincode Labs. The latter is also a major contributor to Bitcoin Core development.

The group is targeted to Bitcoin’s open source developers, exchanges, wallet providers and other industry players. The idea is to bring everyone together to hash out the best practices for adopting solutions like Segregated Witness, transaction batching and improved fee estimation.

“We’re calling the project Bitcoin Operations Technology Group because we want to focus on operational technical work, such as segwit usage, transaction batching, fee estimation and coin selection. We’re as excited about Lightning, Schnorr signatures, Taproot/Graftroot and scriptless scripts as any other Bitcoin engineers, but the project’s focus is on technology that can be deployed by companies today. As new technologies mature, we will help companies adopt and integrate them,” the official announcement reads.

In the future, Bitcoin Optech may perhaps also tackle the Lightning Network, Schnorr signatures and scriptless scripts, when these technologies become more mature.

As Bitcoin Magazine reports, the original idea for the group came out of an email Adam Back, CEO at Blockstream, sent to a list group late last year, after which John Newbery and James O’Beirne, developers at Chaincode Labs initiated the project.

So far, the group has produced four weekly newsletters and held its first workshop earlier this week in San Francisco. The workshop was attended by 17 people, mostly engineers, representing six prominent bitcoin companies in the Bay area. Optech says it will hold more workshops on the East Coast in the U.S. and in Europe and Asia.

Cryptocurrency exchange Coinbase was among the first to get on board with the idea.

“We’re excited to work with Optech on the effort to scale and improve bitcoin,” Brock Miller, lead bitcoin engineer at Coinbase, said in a statement. “By collaborating with leading engineers in this space, we’ll be able to achieve more than we could have by tackling these problems alone.”

Digital payment startup Square has also signed on as an Optech member.

“At Square we continue to explore ways cryptocurrency can expand financial access, and we’re excited to help foster a collaborative ecosystem for the benefit of all,” Mike Brock, strategic development lead at Square, said in a statement.

Moving forward, Optech also plans to host online forums, monitor the adoption of scaling protocols and produce a “Scaling Cookbook,” which will include guidelines for implementing bitcoin scaling technologies.

“Optech is the culmination of ideas from lots of different people, and we’re hoping that this will be a community effort with input from across the ecosystem,” said John Newbery.

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Chaincode Devs, Google Alumni Create Industry Group to Help Bitcoin Scale

Scaling has been a heated topic for the bitcoin community for some time. Further, even when a technology does become available, getting people to use it becomes the next big hurdle. Segregated Witness has not been fully adopted by all wallets and service providers, and not all exchanges batch transactions, to name two examples.

Officially announced today, July 20, 2018, Bitcoin Optech (which stands for operations technology) is creating a forum where Bitcoin developers and companies can come together to solve scaling problems in harmony through workshops and online discussions.

The project was initiated by John Newbery and James O’Beirne, developers at New York-based Chaincode Labs, a cryptocurrency development company and a major contributor to Bitcoin Core — Chaincode Labs is paying their salaries to work part-time on the venture. Former Google product manager Steve Lee is Optech’s project manager. Further support comes from Xapo CEO Wences Casares and institutional investor John Pfeffer in the way of seed funding to cover contractors and expenses.

“Our hypothesis is if we can provide forums or bring together other open source contributors and industry players and try to help those industry players adopt scaling best practices, that could be a more fruitful than shouting at each other on Reddit,” Newbery told Bitcoin Magazine.

The group is targeted to Bitcoin’s open source developers, exchanges, wallet providers and other industry players. The idea is to bring everyone together to hash out the best practices for adopting solutions like Segregated Witness, transaction batching and improved fee estimation. In the future, Bitcoin Optech may perhaps also tackle the Lightning Network, Schnorr signatures and scriptless scripts, when these technologies become more mature.

The original idea for the group came out of an email Adam Back, CEO at Blockstream, a company focused on furthering the development of Bitcoin and blockchain technology, sent to a list group late last year. Now, the idea has legs.

Before getting going, Newbery said he, O’Beirne and Lee made rounds to about 20 Bitcoin companies in San Francisco and in New York to quiz them about their Bitcoin pain points, learn what scaling technologies they were using and gauge their interest in contributing to an industry group. As they got positive feedback for starting the group, the trio moved forward with their plans.

Participating in the forum requires a $5,000 membership fee, though Newbery maintains the annual fee is nominal. “We are not aiming to make a profit out of this. What’s much more valuable to us is engagement,” he said, adding that any information they collect is put toward problem-solving.

So far, the group has produced four weekly newsletters and held its first workshop earlier this week in San Francisco. The workshop was attended by 17 people, mostly engineers, representing six prominent bitcoin companies in the Bay area. Optech says it will hold more workshops on the East Coast in the U.S. and in Europe and Asia.

Cryptocurrency exchange Coinbase was among the first to get on board with the idea. “We’re excited to work with Optech on the effort to scale and improve bitcoin,” Brock Miller, lead bitcoin engineer at Coinbase, said in a statement. “By collaborating with leading engineers in this space, we’ll be able to achieve more than we could have by tackling these problems alone.”

Digital payment startup Square has also signed on as an Optech member. “At Square we continue to explore ways cryptocurrency can expand financial access, and we’re excited to help foster a collaborative ecosystem for the benefit of all,” Mike Brock, strategic development lead at Square, said in a statement.

Moving forward, Optech also plans to host online forums, monitor the adoption of scaling protocols and produce a “Scaling Cookbook,” which will include guidelines for implementing bitcoin scaling technologies.

“Optech is the culmination of ideas from lots of different people, and we’re hoping that this will be a community effort with input from across the ecosystem,” said Newbery.

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