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Throughout the year, there are only a handful of blockchain events that I look forward to attending. It’s not that I’m anti-social. I really enjoy getting together with like-minded people in the crypto space.
But during the last few years, during the crypto bull market, the conference scene had gotten out of hand. Honestly, a lot of conferences had become like Comic-Con for crypto. People dressed up in crypto-themed costumes shouting at you was typical.
Luckily, most of that has disappeared… at least for now.
For anyone that went to Consensus 2019, you couldn’t help but notice that there was a very marked decline in attendees at the event. Compared to 8,000 participants last year, I’d estimate that this year there were only around 3,000.
Consensus 2019 was professional, down-to-business and investment focused. It was about the future of the industry.
Upon reflection, it’s economic Darwinism at its best. There were no free cars, no pump and dump schemes and a clear focus on quality projects and teams. Because that’s all that remains.
The tough markets of the last year weeded out many of the weak projects. Companies with sub-par technology, poor governance and inflated promises are gone or can’t afford the conference entry fees. And what’s left is a pool of healthy, well-managed, well-funded projects that can go the distance.
This alone tells me a lot about the state of blockchain today. But that’s not all….
First, a bit of background. Besides getting a feel for the market, Horizen Labs attended Consensus to meet with our investors, including Barry Silbert of Digital Currency Group and Emil Woods of Liberty City Ventures.
True to their model, the team at DCG made it extremely clear that they are always ready to help their portfolio companies. At the event, they put us in touch with a number of key figures in the industry — which is obviously critical for any startup.
My personal interest in attending the conference was to stay on top of the changing legal environment. I also wanted to observe project trends and see what opportunities lie ahead.
In hindsight, I got a lot more than I bargained for. And after reviewing the following takeaways, I hope you will too.
1. Crypto projects brace for increased KYC AML
Showing up at Consensus 2019, I knew I was in the right place at the right time with Crypto Law Insider.
Easily a third of the talks at the event were wholly dedicated to the regulatory challenges faced by the industry and regulation overall was at the forefront of everyone’s minds.
I’ve written a lot in recent weeks about increasing KYC AML regulatory burdens that will undoubtedly be hoisted on crypto exchanges and other on- and off-ramps from crypto to fiat currency.
One of the most significant developments on this front is the forthcoming imposition of “travel rules” for crypto exchanges.
These take the already overbearing KYC requirements on exchanges even further.
Soon, not only will exchanges be required to collect and store information on their customers, but they will also be required to share that information with other exchanges and institutions when transferring funds.
While this is a shocking development for most die-hard fans of decentralization and anonymity, it should not come as a surprise for those that are familiar with existing banking regulation.
This is something that US banks are already required to do. And as we’ve seen from securities law to tax law, regulators are working hard to consistently apply existing laws to crypto.
But in more positive news…
2. Enterprise blockchain is the next big thing
Every year, there seems to be a new industry trend that grabs everyone’s attention in the crypto space. In past years, it’s been wallets and exchanges. This year, it is without a doubt enterprise blockchain.
Yes, there has been a lot of talk about enterprise blockchain over the last 6 months. But I had not seen it put on such a display as I did at Consensus 2019.
There are a lot of companies entering the space, which is great for a few reasons.
First, it validates the concept and presents opportunities for collaboration. Second, it means that blockchain is becoming more practical. Third, it means that businesses of all sizes will be able to benefit.
Because of the major opportunities in this space, investors are on the prowl…
3. Investors have cash and want to invest
One of the most interesting takeaways from Consensus 2019 was the investor appetite in enterprise blockchain startups.
VCs seem to have more money than ever. But thanks to the crypto winter, they are structuring and funding fewer deals. So everyone is fighting to get a piece of the good projects that are raising capital in this environment.
If you have a promising project with a great team and great technology, you’re in luck. With the current environment, you should have no problem raising capital. In fact, Horizen Lab’s oversubscribed capital raise is a great example.
But unfortunately, you can’t show up at Consensus and expect people to write you a check, at least not anymore. You need to be in the right segment with the right team and you need the right backers.
By backers, I mean cornerstone investors that believe in you and your project. Because more than anything, VCs rely on who else is in the deal. So if you’re in this boat make sure you choose your first few investors carefully.
What does this mean for Crypto Law Insiders?
Insiders should view the current market conditions as an opportunity. If you’re still investing, you can see which projects have staying power and which do not.
Seeing how companies adjust to hard times now will give you a sign of how they will face challenges in the future. It’s a unique opportunity to see how resilient they are and how they treat investor money.
This is especially true with enterprise blockchain. As projects continue to pick up speed, determining the one to back will be important. And there are many companies targeting this segment and taking many different approaches.
If you want to understand how enterprise blockchain is being used, read my recent article on how Latin America’s largest invoicing company is turning to enterprise blockchain.