Where Has Crypto Law Insider Been in 2021?

Wow, it feels good to be back!

These last few months have been so busy I’ve had no time to write.

But I’m proud to say that the project I co-founded with Rob Viglione and Liat Aaronson, Horizen Labs, closed a $7 million seed round last month led by Digital Currency Group, Liberty City and Kenetic Capital. This round gives us the funds needed to truly scale our organization in ways that will allow our technology to dominate the crypto sphere.

Horizen’s Zendoo sidechain ecosystem is expected to launch in November, along with the first iteration of Horizen Lab’s Software Development Kit (SDK).

One of the first products to be built using our SDK is zkAudit, a real-time auditing platform that allows users to verify any on-chain transaction, including crypto held, transferred and received without revealing any of the underlying addresses. To learn more about this and the zero-knowledge cryptography that makes it possible, check out our interview with Maurizio Binello.

One of zkAudit’s first partners is the Celsius Network, the largest borrower/lender in crypto, which uses the protocol to provide a real-time audit of its crypto holdings. With zkAudit, Celsius’s stakeholders can know instantly and with confidence that Celsius genuinely has the Bitcoin it claims to have.

For anyone familiar with the Tether scandal, amongst countless other scandals in the space, it is clear that this is a huge step toward greater credibility in crypto.

If you want to know more about the exciting things that Horizen Labs is doing, check out this recent blog post from our CEO Rob Viglione aka ‘FinPunk’.

As for Crypto Law, though I have not been very active here, I’ve still been quite active in the space in general. Here’s a little taste of my commentary on Crypto Law over the past few months:

Finally, to get things back on track on Crypto Law Insider, here are some of the key news items that I believe all Insiders should have on their radar:

Table of Contents

The Rise of Ethereum Ecosystem Alternatives

This year has been absolutely crazy with respect to Ethereum ecosystem alternatives. Accelerated by outrageously high gas fees, developers started to take their projects elsewhere. We’ve seen an explosion of activity on Polkadot, Solana, Polygon and Avalanche. Solana in particular has come from “nowhere” to become one of the top 10 coins by marketcap. Its rise to the top is nothing less than extraordinary and certainly worthy of deeper analysis. Look forward to more on this in future Crypto Law Insider articles.

The Nonsense Infrastructure Investment and Jobs Act

The US government, legislators and regulators continue to bungle along incompetently as usual. Last month, the US passed a rushed Infrastructure Investment and Jobs Act that contained unintelligible crypto provisions that did not make sense to anyone. Literally no one. Not the legislators enacting them nor the regulators tasked with enforcing them. Of course, due to the embarrassingly ineffective US legislative process, the bill passed regardless. 

Erratic SEC Enforcement

Meanwhile, SEC enforcers continue to haphazardly enforce securities regulations against crypto projects in the most uneven ways possible. As I predicted, DeFi has finally entered the SEC’s radar with the SEC stating that DeFi is not beyond the law. This clear message caused Uniswap to move towards a more regulatory-compliant platform, removing the trading of certain tokens it deemed risky. This is the first step in what will inevitably be a fully KYC/AML compliant platform. Expect more or less the same from every major player in the DeFi space over the coming years. 

SEC vs. Ripple

Also as I predicted, the SEC has taken the stance that XRP was sold pursuant to unlawful securities offerings. Although I’m not a huge fan of the make-believe blockchain project, in this case, it seems to be the lesser of two evils. So the good news here is that XRP has plenty of money to fight and it doesn’t fight fair. The project has already subpoenaed the SEC and has sought permission to depose the former director of the SEC’s Division of Corporation Finance. I look forward to the release of a lot of salacious details during this process, including the list of which SEC employees own XRP. ☺

What does this mean for Crypto Law Insiders?

For Insiders, it is clear that the crypto space is progressing steadily toward greater credibility, which paves the way for greater institutional and mainstream adoption.

From the regulatory side, we gain regulatory certainty with each new SEC enforcement. The SEC has relentlessly gone after some projects that fall afoul of its regulations, while inexplicably ignoring others. This includes projects that many previously thought were untouchable, including Ripple and possibly Uniswap.

At the same time, private initiatives, such as Horizen Labs’ zkAudit, are helping to build credibility from within the crypto space. 

Overall, these public and private forces are merging to create a more stable crypto environment. The new world of crypto may not be as fun as when it was the Wild Wild West, but you’re a lot less likely to get shot.

Dean Steinbeck

Dean Steinbeck

Dean Steinbeck, Managing Director of Crypto Law Insider, is the leading authority on legal issues related to cryptocurrency and blockchain technologies.