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Andreessen Horowitz Backs Dfinity With Largest Crypto Investment Yet

Dfinity, Cryptocurrency–Andreessen Horowitz (A16Z), the popular venture capital firm of Marc Andreessen and Ben Horowitz, has announced its most ambitious cryptocurrency investment to date in the form of new blockchain project Dfinity. Billed as a company to reinvent cloud computing and challenge the current market leaders of Amazon Web Services and Saleforce, Dfinity looks to implement a cheap, decentralized alternative that utilizes cryptocurrency and blockchain at its core. It refers to its ambitious new project as a “world computer” and “Cloud 3.0”–two statements that have been taking the investment circuit by storm.

Earlier in the week, the company reported securing a $102 million round of funding, with Andreessen Horowitz making up one of the more high profile investors, in addition to the $61 million raised in March. While blockchain based projects are becoming a dime-a-dozen in the current landscape of tech fundraising, Dfinity plans to distinguish itself through a number of innovations related to scalability, in addition to utilizing the already proven secure nature of cryptocurrency. By basing the project on a decentralized framework, Dfinity looks to cut both costs and bureaucratic clutter by removing the singular entity at the heart of the computing enterprise, a step over monolithic competitors like Amazon Web Services.

Speaking in an interview with Fortune and on a blog post about the new project, Chris Dixon of Andreessen Horowitz expanded upon why their firm had placed its largest blockchain-based investment in Dfinity, in addition to praising the prowess of founder Dominic Williams and the development team,

“Decentralized computation networks like DFINITY stand to bring us closer to a world where digital platforms can be constructed from trustless, autonomous, and open source software that is owned and governed by communities of users and developers, rather than companies.”

Dixon is holding to a realistic view of a timetable for Dfinity adoption, as well as how the company can grow via a stepping stone approach to the marketplace. Rather than immediately going after the major clients for both Microsoft and Amazon, Dixon outlines how Dfinity can first find traction in the world of academia and startups while building towards the cost-saving, improved utility features that will be attractive to large firm companies.

While Dfinity has avoided referring to its project as an initial coin offering or in any way issuing coins that come at the cost of regulatory hurdles down the road, the company has been proactive by instituting an airdrop this past May which saw the distribution of $35 million tokens to early investors. The company is eyeing Ethereum as a potential opponent in the space of cryptocurrency, with plans to challenge the second coin by market capitalization as the leader in instituting smart contracts.

Dixon, again speaking with Fortune, attempted to downplay the competition between Dfinity and Ethereum, stating that the two coins will offer complimentary services. However, he did find time to comment that Dfinity is a currency better poised for large projects and overcoming the barrier to scale currently faced by most cryptos, while still lauding Ethereum for its high energy and development enthusiasm.

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Andreessen Horowitz, Polychain Capital Lead Blockchain Startup’s New $105 Million Funding Round

Swiss and US-based blockchain cloud computing startup DFINITY has closed a new funding round worth over $100 million from repeat backers including Andreessen Horowitz, it confirmed August 29.

DFINITY, which aims to build what it describes as an “Internet Computer,” raised a total of $102 million Swiss francs ($105 million) from partners that also featured blockchain-focused investment outfit Polychain Capital.

Both Polychain and Andreessen via its investment fund a16z had previously participated in the startup’s investment, contributing to a $61 million round in February.

Having raised a total of just under $200 million since its foundation in 2015, DFINITY ultimately wants to create a platform which will “host the world’s next generation of software and services on a public network,” TechCrunch quotes a16z partner Chris Dixon as saying.

“The Internet Computer is on track to become a critical piece of the future technology stack,” he added.

The move marks a further commitment from Andreessen to the cryptocurrency sphere, the company in April becoming part of a $133 million funding round in blockchain project Basis’ stablecoin.

More recently, in July, Andreesen participated in a $45 mln funding round for blockchain cloud computing platform Oasis Labs as part of its plan to help companies adopt blockchain.

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Crypto Presents a Challenge Beyond Hard and Fast Asset Classifications, Say Speakers at US House Committee Hearing

Witnesses before the U.S. House of Agriculture Committee at a public hearing July 18 were unanimous in their view that digital assets complicate the hard and fast distinctions of existing regulatory frameworks.

The hearing was chaired by Texas U.S. Representative Michael Conaway, who convened six eminent witnesses to give testimony — former Goldman Sachs partner and U.S. government regulator Gary Gensler, Andreessen Horowitz managing partner Scott Kupor, the CFTC’s Daniel Gorfine, law professor Joshua Fairfield, Clovyr CEO Amber Baldet, and Perkins Coie managing partner Lowell Ness.

A key takeaway from the hearing was that a given digital asset may shift its regulatory status as it transitions from one context to another, given the fluidity of the crypto ecosystem.

Both Gensler and Fairfield argued that when a digital token is marketed at a “pre-functional” moment in its development — i.e. during an Initial Coin Offering (ICO) — then the sale is judged an investment contract and thus a security to be regulated by the Securities and Exchange Commission (SEC)

Critically, however, crypto tokens may cease to be securities once they become used in a decentralized network as a utility token as, for example, in the case of Ethereum (ETH). This means that a digital asset may at one point be an SEC-regulated security, only to later become a commodity of relevance to the Commodity Futures Trading Commission (CFTC).

As Gorfine outlined, the CFTC does not generally exercise direct oversight of the underlying commodity markets themselves, but rather regulates derivatives such as the futures or swaps markets.

Gensler proposed that state of the “underlying cash-crypto markets” is presently “at best a wild west,” and that the CFTC potentially requires more authority and resources to deal with the challenge. The SEC, for its part, could need 2-4 years to address the “thousands” of “noncompliant” actors in the ICO space, he said.

Ness warned that over-aggressively extending securities classifications could seriously impede the crypto space, which has evolved precisely to create a network that allows for “value transfer at the speed of software.”

The SEC notably requires that the beneficial ownership of an asset can be determined at any given time, something that Gensler said was not yet technologically feasible to achieve in a frictionless way in the crypto space.

In response to committee members’ concerns that crypto can be used for illicit activities, Kupor suggested that “Bitcoin is law enforcement’s best friend,” given that pseudonymous transactions can ultimately be traced using intelligence tools that analyze traffic on the blockchain.

Ness quipped that “the alleged Russian hackers were caught because they used Bitcoin,” in reference to the recent indictment that charged twelve Russian nationals with using crypto to fuel their efforts to “interfere” in the 2016 U.S. presidential elections.

In mid-May, a U.S. House Subcommittee hearing on blockchain in supply chains concluded that the technology has a variety of applications, even without industry-wide standards.

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CFTC Official to Congress: Don't Be 'Hasty' With Crypto Rules

The director of the Commodity Futures Trading Commission (CFTC)’s fintech initiative cautioned against what he called “hasty regulatory pronouncements” during a Congressional hearing on Wednesday.

The remarks from Daniel Gorfine, director of LabCFTC, were directed toward members of the U.S. House Committee on Agriculture which, as reported by CoinDesk, sought testimony on the issue of cryptocurrencies and digital assets. Alongside Gorfine were former JPMorgan blockchain lead Amber Baldet, former CFTC chair Gary Gensler and A16Z managing partner Scott Kupor.

Gorfine framed his remarks from the perspective that many different things can be considered “commodities” – but not all of them would warrant attention from U.S. regulators.

“It’s only when we start to see the rise of futures or swaps products built on those commodities that we have kind of direct oversight,” he remarked, going on to state:

“We all have the shared goal to bring clarity and certainty to the market but [we] also need to be sure that we are thoughtful in our approach and do not steer or impede the development of this area of innovation. Indeed, while some may seek the immediate establishment of bright lines, the reality is that hasty regulatory pronouncements are likely to miss the mark, have unintended consequences, or fail to capture important nuance regarding the structure of new products or models.”

Gorfine would return to that point several times during the hearing, which began at 10 a.m. local time.

“It’s important that we’re not hasty in figuring out what the contours are of applying securities law and then the commodities framework,” he remarked.

Congressional sentiment

The hearing notably provided a window into what some members of Congress think when it comes to the subject of cryptocurrencies – though it wasn’t positive in some cases.

For example, Rep. Collin Peterson remarked that, in his view, much of the cryptocurrency ecosystem “seems like a Ponzi scheme” and asking “what’s behind this?”

It was Gensler who offered a response, stating that “there’s really nothing behind gold either … what’s behind it is a cultural norm, for thousands of years we liked gold.”

“We do it as a store of value, so bitcoin is a modern form of digital gold. It’s a social construct,” he continued.

In other cases, committee members simply wanted more information on how cryptocurrencies exactly work.

“We’re creating another money supply here as I see it. I just don’t know how that works. Our dollar sets the mark for the world. I can’t visualize how this would work,” Rep. Rick Allen commented.

But it was Michael Conaway, the chairman of the committee, who perhaps had one of the most notable – and telling – remarks about bitcoin, coming at the very end of the hearing and just days after the U.S. Justice Department claimed it had traced bitcoin transactions conducted by 12 Russian intelligence officers accused of hacks during the 2016 presidential election.

“As long as the stupid criminals keep using bitcoin it’ll be great,” Conaway quipped.

Want to read CoinDesk’s full by-the-second coverage of the hearing? Follow our stream on Twitter here

Daniel Gorfine image via House Agricultural Committee

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.

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Platform for Enterprise Blockchain Adoption Nets $45 Mln From A16ZCrypto, Binance

Blockchain cloud computing platform Oasis Labs announced July 9 that it has raised $45 mln from major investors as part of its plan to help companies adopt blockchain.

In a press release, Oasis, which has University of California professor Dawn Song as its CEO and co-founder, described its plans to build a “decentralized internet” by resolving businesses’ “concerns” about implementing the technology.

“Blockchains are poised to revolutionize much of the way we live, but many developers and organizations have understandable concerns about performance and privacy limitations that are currently hindering their ability to embrace the technology,” Song said.

Oasis’ investors, which include Andreessen Horowitz’s crypto venture fund a16zCrypto, cryptocurrency exchange Binance, Pantera Capital and Accel, nonetheless consider the status quo may not last as long as is feared.

“Today’s internet is experiencing significant growing pains when it comes to providing effective security and privacy protections, which is only compounded by the rise of data-intensive services like AI,” Accel partner Jake Flomenberg stated, adding:

“At the same time, however, the opportunity has never been greater to responsibly leverage data in the web’s next phase of products and innovation.”

Monday saw applications for Oasis’ private testnet go live, in a bid to deliver a production version with the input of developers.

Blockchain adoption has faced new criticism in recent months, specifically in the banking sector, with various sources skeptical as to whether its benefits are truly compatible.

Ripple, the company behind a multibillion-dollar blockchain platform focused on cross-border payments, admitted last month banks are “unlikely” to adopt the technology due to privacy and other concerns.

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A16z Leads $45 Million Raise for Blockchain Startup Oasis Labs

Cloud computing startup Oasis Labs successfully raised $45 million in a private token pre-sale to develop a blockchain platform aimed to rival Amazon Web Services

The sale, led by Andreessen Horowitz’s new “a16z” crypto fund, saw Accel, Binance, Pantera, Polychain, Metastable, Foundation Capital, Electric Capital, DCVC and Coinbase co-founder Fred Ehrsam all contribute, according to a press release. Most notably, this was a16z’s first investment, Oasis CEO Dawn Song told CoinDesk.

The startup is now focusing on developing its core features, Song said, which will be deployed to the company’s private test network – slated to be opened to the public “soon.”

It’s the startup’s blockchain itself that may be garnering all the investor attention. According to Song, its architecture allows transactions to be verified with “far less duplication while providing the same level of integrity and security guarantees.”

She added:

“In our experiments we see performance orders of magnitude greater than Ethereum. This architecture also supports far more computationally intensive tasks like machine learning and AI, which are not possible with today’s blockchain technologies.”

“Security and privacy [are] built into every layer of the network,” she continued. As a result, the blockchain is built “top-to-bottom” with those two features in mind, ensuring that transactions can be verified without nodes seeing sensitive data and smart contracts will not leak private information.

The applications built upon the network will also differ from those currently being developed for existing platforms, Song explained. “For example, our machine learning framework enables smart contract developers to perform training and inference directly in the smart contract, while preserving privacy of data.”

“Our platform is also backwards compatible with Ethereum, making the transition easy for any developer that is already comfortable with existing tools,” she said.

U.S. dollars 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.

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Andreessen Horowitz Hires First Female General Partner for Crypto Fund

Silicon Valley-based venture capital firm Andreessen Horowitz has hired Katie Haun as its first female general investing partner to run the company’s newly formed $300 million cryptocurrency fund, according to an announcement published June 25.

Haun, who is also a director on the board of Coinbase, served as a federal prosecutor with the U.S. Department of Justice for ten years, where she focused on digital assets and cryptocurrency startups. She reportedly led investigations into Mt. Gox and took down the corrupt agents on the Silk Road task force. Ben Horowitz, co-founder of Andreessen Horowitz, said:

“As I learned more about her career, I was even more impressed. She stood up to murderous motorcycle gangs and cartels, shut down organized crime, nailed RICO murderers, uncovered the largest money laundering and cybercrime rings, and stopped white collar crime and public corruption. Through it all, her prosecutorial record was whatever and 0. She never lost a case. Not once. Not ever.”

According to Bloomberg, Andreessen Horowitz has formed a new crypto fund, that will invest in a range of companies from blockchain projects to initial coin offerings (ICOs). All crypto deals by the firm will be reportedly conducted from this fund. The venture capital firm had already invested about $100 million in digital currency in its last fund. Chris Dixon, a general partner at the fund, said:

“We’re excited to have a fund focused on this, with the flexibility to let us make the investments we want to make. The inflow of entrepreneurs has dramatically increased over the past year.”

Haun does not have direct venture capital experience, as per news outlet Recode, though she has made some personal investments and teaches a cryptocurrency course at Stanford. The number of women involved in cryptocurrency and blockchain is far lower than that of men. Dixon pointed out that gender diversity is “definitely something that we need to improve on.”

Recently, there have been attempts to attract more women to the blockchain and digital currency fields. Initiatives like Mogul’s “Women in Crypto” events and organizations like the Women in Blockchain Foundation have been making an effort to get more women involved in the blockchain and crypto space.

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Andreessen Horowitz Has Launched a $300 Million Crypto Fund

Silicon Valley investment powerhouse Andreessen Horowitz (a16z) has launched a new $300 million fund focused on cryptocurrencies.

The fund, as explained in a blog post published Monday, will be named “a16z” and will notably feature former federal prosecutor and Assistant U.S. Attorney Kathryn Haun as one of its co-leads.

That the investment firm would move to vastly expand the scope of its activities in the industry is unsurprising, given the millions it has poured into projects and protocols built around a range of use cases. Andreessen Horowitz has also invested in a number of notable startups, including crypto exchange Coinbase.

General partner Chris Dixon indicated in the post that the crypto-fund would take a decidedly long-term tack in its investments.

“We’ve been investing in crypto assets for 5+ years,” he wrote. “We’ve never sold any of those investments, and don’t plan to any time soon. We structured the a16z crypto fund to be able to hold investments for 10+ years.”

Dixon went on to add:

“We plan to invest consistently over time, regardless of market conditions. If there is another ‘crypto winter,’ we’ll keep investing aggressively.”

In another hint at the fund’s overall thesis, Dixon said that a16z would focus its efforts on projects with a “non-speculative use case.”

“We want services powered by crypto protocols to be used by hundreds of millions and eventually billions of people,” Dixon wrote. “Crypto tokens are the native asset class of digital networks, but their value is driven by the underlying, practical uses cases.”

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.

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A16z Leads Investors in $20 Million ICO for Tokenized Assets Platform

Asset tokenization platform TrustToken just raised $20 million in a strategic token sale with the help of major venture corporations, including Andreessen Horowitz (a16z).

The startup announced Monday that the cash raised in the funding effort, which was also backed by BlockTower Capital and Danhua Capital, will be used to continue developing its platform, which seeks to list different tokens back by physical assets, according to a press release.

TrustToken has so far released one such token already – a “stablecoin” called TrueUSD, according to the release.

In a statement, TrustToken chief executive Danny An said:

“The support of these leading investment firms represents a significant step towards our goal to build a compliant tokenization platform for currencies, commodities, and real-world assets. We will draw on the combined expertise and network of these firms as we grow our industry partnerships and extend the reach of our first product, TrueUSD.”

The funds will also help TrustToken expand its legal, product and engineering departments, according to the release.

Ari Paul, managing partner at BlockTower, spoke to the potential of blockchain technology and the reasons for the investment in a statement, stating that “tokenization of real-world assets will produce value much in the same way that ‘equitization’ did.”

“We can now buy fractional ownership in a basket of commercial office buildings or commodities via equity instruments,” he continued. “Tokenization will further reduce friction in asset trading and ownership.”

USD 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.

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WSJ: ETH Now In A ‘Gray Zone’, But 2014 ICO Was Likely An ‘Illegal Securities Sale’

Ethereum (ETH), the world’s second largest cryptocurrency, is coming under particular scrutiny from U.S. federal regulators, the Wall Street Journal (WSJ) reports today, May 1. According to the WSJ, regulators are debating whether or not to classify it as a security under U.S. law.

The WSJ cites source familiar with the matter, who report that regulators have declared that ETH, the world’s largest altcoin, is in a regulatory “gray zone”. A major concern reportedly being raised is how ETH was first distributed – in a sale of ETH starting in July 2014, the Ethereum Foundation raised over 31,000 BTC, (around $18.3 mln at the time) in one of the world’s first Initial Coin Offerings (ICOs).

Because the funds were used to develop the Ethereum platform, the WSJ’s said regulators are concerned that the sale of ETH was arguably a securities sale, especially given that many investors likely bought the coins speculating that the it would eventually rise in value.

If ETH is deemed a security, then under U.S. federal law it should have been registered as such with the U.S. Securities and Exchange Commission (SEC) back in 2014 before being sold to US investors, as the WSJ notes.

Regulators are reportedly also studying whether or not the Ethereum Foundation continues to wield influence over the coin’s value.

Former U.S. government regulator Gary Gensler told the WSJ that “there is no legal precedent” for ETH. In a speech last week, Gensler said that “there is a strong case” ETH could be a “noncompliant” security – meaning unregistered with the SEC. As Cointelegraph reported, however, Gensler noted that ETH may be able to avoid a securities classification, since the coins are now mined.

The Ethereum Foundation responded to Gensler’s claims last week, saying that it does not control the supply or demand of ETH and owns less than 1% of the amount in circulation.

According to the WSJ, a regulatory body that will include senior SEC and CFTC officials is scheduled to discuss possible measures on May 7.

Just last month, major VC investment firms Andreessen Horowitz and Union Square Ventures met privately with the SEC to argue for a broad regulatory exemption for ICOs.

ETH is currently trading at an average of $663 per coin, down almost 2 percent over the past 24 hours.