Slides from our second Cryptocurrency and Blockchain Regulation workshop

1. FinTech Workshop:
Cryptocurrency & Blockchain Regulation
Matthew Gertler
Promontory Financial Group, LLC
mgertler@promontory.com
November 10, 2015

2. Overview
• The Rise in Price of Bitcoin
• Blockchain Alliance
• Final Silk Road Auction
• Cryptolocker
• Publicly Traded Bitcoin Companies
• Questions

3. Rising Price of Bitcoin

4. Rising Price of Bitcoin
China drives
demand
Greece almost
defaults
Cyprus Banking
Crisis
China drives
demand

5. Rising Price of Bitcoin
• China
▫ Capital controls
▫ Switching to new assets after stock market collapse
▫ MMM Ponzi Scheme
• Bitcoin exempt from VAT
▫ Bitcoin transactions "are exempt from VAT under the provision concerning
transactions relating to currency, bank notes and coins used as legal tender.“
• Bank investment in Bitcoin startups
▫ R3-Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse,
JPMorgan, State Street, Royal Bank of Scotland, and UBS have all formed a
partnership to draw up industry standards and protocols for using the
blockchain in banking.
▫ Chain-Visa, Nasdaq, Citi and other industry players invested $30 million
in Chain, a blockchain developer platform that serves an enterprise market.
▫ Abra-In a world where bank transfers take two to three days, Bitcoin technology
makes it possible to transfer money instantaneously and securely from person
to person […] many of them are choosing to do so without marketing
themselves as Bitcoin companies.

6. Blockchain Alliance
• Spearheaded by Coin Center and the Chamber of Digital Commerce, with
support from a range of companies including: BitFury, BitFinex, BitGo,
Bitnet, Bitstamp, Blockchain, Circle, Coinbase, CoinX, itBit, Kraken,
Noble Markets and Xapo.
• The alliance will serve as a resource for law enforcement to help combat criminal
activity involving bitcoin and the blockchain
▫ It has so far engaged with the Department of Justice, the U.S. Secret Service,
Immigration and Customs Enforcement, Homeland Security Investigations and the
Commodity Futures Trading Commission.
• “It’s no secret that bitcoin has perception issues, which is a roadblock to
mainstream adoption. Having an open dialogue with law enforcement and
policymakers will help reduce anxiety about this transformative technology”
Disclaimer: This presentation is a summary of many imporant issues but does not cover every potential
legal or regulatory issue surrounding virtual currency. Make sure to consult counsel

7. Final Silk Road Auction
• 30 bids were placed on the remaining bitcoins, which were separated
into 22 different blocks
• 21 of these blocks contained 2,000 bitcoins each (valued at around
$790,000). The 22nd block, the “supreme leader” so to speak,
contained 2,341 bitcoins, worth approximately $926,200.Regulatory
Oversight (2 examples)
• The first one arguably drew the most participation (likely due to being
the first), attracting almost 50 registered bidders and 63 individual
bids.

8. Cryptolocker
“"The amount of money made by these criminals
is enormous and that’s because the
overwhelming majority of institutions just pay
the ransom ... To be honest, we often advise
people just to pay the ransom.”

9. Bitcoin and Institutional Investment
• GBTC-Bitcoin Investment Trust
▫ ETF pegged to Bitcoin
• BTCS-The Bitcoin Shop
▫ Transaction Verification Service
• GAHC-Global Arena Holding
▫ Bitcoin Company Investor
There are a few others internationally.
Disclaimer: This should not be considered investment advice. The sole purpose of this slide is to discuss
some publicly traded bitcoin companies. Any investment decision is made by you and you alone.

10. Last Bit
• Bhagwan Chowdhry, professor of economics at UCLA Anderson
School of Management in Los Angeles, said on his Twitter feed
that he has nominated Satoshi Nakamoto for the Nobel Prize in
Economics. Nakamoto is a pseudonym for the person or people
widely regarded as the founder of bitcoin and whose identity
remains unknown.

11. Questions?
Matthew Gertler
Promontory Financial Group, LLC
mgertler@promontory.com
November 10, 2015