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Our weekly opinion piece and overview View this email in your browser February 19th, 2017 Piling in   Japan's upcoming bitcoin regulation could lead to an influx of financial firms into the cryptocurrency space. The repercussions are likely to be felt far beyond the country's borders. (Find out why in THE TAKEAWAY.)   TOP STORIES ON COINDESK Regulation heats up Cryptocurrency regulation, either recent or pending, seemed to be front-of-mind this week (for our take on Japan's, see THE TAKEAWAY below). CoinDesk published an opinion piece positioning the upcoming legislation in The Philippines as a good thing. The European Union reaffirmed that it likes the blockchain and wants to step up its support. And while Arizona seems to be on a path that will ban the blockchain tracking of firearms, North Dakota blocked a resolution that proposed thinking about bitcoin regulation (which could be interpreted to mean that they don't want to think about thinking about it – not a good sign). Ethereum's business bid Eyes were also on ethereum, as details emerged of Enterprise Ethereum, a group initiative that will focus on private adaptations of the ethereum blockchain. Some big names are said to be involved. Elsewhere, founder Vitalik Buterin outlined some of the changes due in the upcoming release Metropolis. CoinDesk took a look at the growing field of applications built on ethereum. And congratulations to Project Oaken for winning $100,000 at the Dubai Government Hackathon for its ethereum IoT project. Swift ploughs ahead Swift dampened the party a bit by insisting that cross-border payments could be made more efficient without the blockchain. This week they launched their much-awaited GPI initiative, which overlays the current system with an application layer that aims to add speed and transparency – without any blockchain integration.  China effect And, of course, the week just wouldn't seem right without news from China. BTCC, one of the country's leading bitcoin exchanges, announced that it was joining its peers OKCoin and Huobi in temporarily suspending cryptocurrency withdrawals. The market didn't seem to blink, though, and most cryptocurrencies ended the week on a strong note.    See all CoinDesk stories JOB LISTINGS GENESIS TRADING - Sales Marketing Associate The Sales and Marketing Associate is a sales-support position, responsible for identifying and contacting prospects, with the expectation of bringing revenue-producing clients into Genesis' digital currency business lines. More info. GENESIS TRADING - Research Associate The Research Associate will support the continued growth and expansion of the business, and will proactively assess new market opportunities and products within the digital currency space. More info. Are you looking for talent? Let jacob@coindesk.com know if you're interested in posting job opportunities here. QUOTE OF THE WEEK "Blockchains don't offer us a trustless system, but rather a reassignment of trust." – E. J. Spode, "The Great Cryptocurrency Heist", Aeon   THE TAKEAWAY  A relatively quiet and traditionally isolated market is about to set a precedent that could change the blockchain sector world-wide. Last week, CoinDesk met with a group of representatives from some of Japan's blockchain startups and enterprise players. Conversation revolved around, among other things, the upcoming regulation of cryptocurrencies, and the impact it would have on business models.       The consensus seemed to be that the new rules (a requirement to get a license from the Financial Services Agency, register with the anti-money laundering authorities and submit to periodic audits and inspections) would be good for the sector. Bestowing legitimacy will get both people and businesses more comfortable with alternative currencies, increasing volume, investment and network effects. While that may be true (with some caveats), the real potential lies elsewhere.  One of the main risks is that the legislation ends up having the same effect as New York's BitLicense, driving out businesses and stagnating the local ecosystem. The costs are likely to winnow out struggling startups. And while you could argue that the additional stability and security is worth the loss of innovation and choice, the resulting consolidation is a step towards centralization in a sector based on decentralization. On the other hand, a likely consequence is that large financial firms will take an interest in the cryptocurrency business, looking to diversify their offerings and broaden their client base. It's already happening. Last year, finance giant SBI invested in exchanges BitFlyer and Kraken, and announced plans to set up its own. FX broker Money Partners Group invested in TechBureau. GMO Internet set up a cryptocurrency wallet. And, this week, three of Japan's largest financial institutions participated in BitFlyer's latest funding round. The inflow of institutional funds will not only add liquidity and respectability to the sector. It will also give startups the impetus to both strengthen their business at home and grow internationally. While that impact will be significant, a potentially more far-reaching one will be a change in banking practices. We see frequent reports of bitcoin startups in other high-tech, allegedly innovative financial centers having to shut down because banks won't work with them. Here we have banks actually investing in or creating bitcoin businesses. The example set by Japanese banks could encourage a new tone in the global cryptocurrency sector. We have become used to seeing banks dedicate resources and attention to blockchain projects. Although some have started experimenting on private versions of public blockchains, on the whole, banks have stayed away from bitcoin and its peers. An increased interest in a different store of value, combined with a focus on improved processes, could lead to new innovations, concepts and use cases. To put this into perspective, we are looking at the potential symbiosis of two sectors that are both global leaders. Tokyo is one of the top five financial centers worldwide. And Japan recently took over from China as the largest bitcoin market. Could this lead to a "co-opting" of alternatives to fiat by the gatekeepers of the fiat system? Possibly, but the question misses the point. An eventual mingling of the two was always inevitable, either as a stepping stone or as an end goal. If the example set by Japan spreads, we could be at the threshold of that phase. This will imply a cultural shift on both sides. However, the fundamentals of bitcoin are unlikely to change. The fundamentals of traditional banking could.     - Noelle MORE BACKGROUND: Will Bitcoin's Resurgence Bring the Banks on Board? Singapore Central Bank Proposes New Rules for Bitcoin Startups Bank Regulator Calls for Broader Oversight of EU Bitcoin Services Why Swedish Bank SEB Backed its First Bitcoin Startup   Share Tweet Beyond CoinDesk... OTHERS ARE TALKING ABOUT There were some thought-provoking articles out there this week. Aeon provocatively combed through the debate around ethereum's contentious hard fork, and goes deep into the philosophy of trust. TechCrunch looked at the risks of ICOs, as well as some innovative businesses springing up in and around the sector. Bloomberg points to the increasing activity in bitcoin derivatives as a sign that the cryptocurrency is growing up.   Forget about finance – Reaction hopefully posited that blockchain technology could make disaster relief more efficient. Forbes dives into the concept of "open sectors", from the blockchain to Burning Man, and how governance and innovation can be managed. And Wired published a sparkling story (sorry) about diamonds and how the blockchain can help to verify provenance.   UPCOMING EVENTS Feb 20-22 – Blockchain & Smart Contracts 2017 – Berlin, Germany Feb 21-22 – d10e-The Leading Conference on Decentralization – Bucharest, Romania Feb 27 – Distributed: Markets – Atlanta, GA Feb 28 – Blockchain Technology – Moscow, Russia March 1 – DTCC Fintech Symposium 2017 – New York, NY March 1-3 – The Blockchain Africa Conference – Johannesburg, South Africa March 1-3 – Digital Finance World 2017 – Frankfurt, Germany REPORTS Blockchain Technology: What's in Store for Canada's Economy and Financial Markets? – CD Howe   WHAT WE'VE BEEN UP TO We haven't seen hide nor hair of our research team recently, as they have been feverishly putting the finishing touches to a new research report. We'll be releasing BLOCKCHAINS FOR INSURANCE next week, in a different format than usual, and with, seriously, some very cool graphics. With that, I'll leave you in suspense… 😉      Copyright © 2017 CoinDesk, All rights reserved. You're receiving this email because you subscribed for updates on our website. Our mailing address is: CoinDesk 636 Avenue of the Americas New York City, NY 10011 Add us to your address book Want to change how you receive these emails? You can update your preferences or unsubscribe from this list Received this from a friend? Subscribe here.