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India: Notable Crypto Exchange Shutters Ops Amid Bitcoin Ban Rumors

Indian Crypto Exchange Bites The Dust

Despite seemingly massive support for Bitcoin, crypto assets, and blockchain in India, one of the nation’s largest exchanges recently shuttered its operations. According to a blog post published Thursday, penned by a co-founder of Koinex, Rahul Raj, the platform will be closing operations immediately.

Raj, explaining that rationale behind this dramatic decision, cites “months of [regulatory] uncertainty and disruption”. This is in reference to India’s odd stance on digital assets, which has forced regulated financial institutions, including banks, to stop interacting with crypto exchanges, startups, and individuals in this ecosystem. Without a proper banking partner, it is no surprise that Koinex has been struggling, as, after all, fiat-to-crypto (and vice-versa) trades are a key part of any exchange. Raj expands:

The last 14 months have been tough to operate a digital assets trading business in India, on account of the closure of bank accounts holding user deposits… We have consistently been facing denials in payment services from payment gateways, bank account closures and blocking of transactions for trading of digital assets. 

This is far from the worst though. Earlier this month, the Bitcoin and crypto asset community woke up to a harrowing tidbit of news from Bloomberg Quint. An article, which cited a “draft bill”, revealed that regulators in India, from multiple financial and judiciary agencies, revealed that those who involve themselves in the “sale, purchase and issuance of all types” of crypto assets, including Bitcoin, could lead to a ten-year jail sentence and/or fine.

At the same time, the Reserve Bank of India and its partners have purportedly also proposed the creation of a “Digital Rupee” to fill in the void left by a ban on Bitcoin. This exact strategy has purportedly been “recommended by a panel headed by Economic Affairs Secretary Subhash Chandra Garg”, and has been backed by an array of other respected governmental agencies.

This article purportedly killed Koinex’s volume, with the platform’s co-founder claiming that this draft bill created a mass amount of “FUD” which resulted in a “sharp decline in trading volumes” and an anti-crypto stance from citizens of the nation. Per data from The Block, the volume on Koinex has, in fact, plummeted. Since hitting $9.7 million of aggregate volume in September 2018, this figure has been halved to $4.3 million. Ouch.

The weird thing is that as reported by Ethereum World News previously, the Reserve Bank of India has denied any involvement in any new crypto ban. In a statement issued June 4th (prior to this news), the central bank claimed that it is not aware of any new plan for a ban. They explain that they were not forwarded any draft bill, if it exists at all, from any fellow financial regulator in India, nor was in communication with any other agencies on the subject matter.

This doesn’t imply that the draft bill doesn’t exist though, yet the RBI should be involved if it truly is in the works.

Regardless, many note that if the ban was put in place — if it does exist after all — it may actually be a net benefit for the cryptocurrency space. This is in reference to the Streisand effect and the theory that consumers like to oppose government control in some settings.

Photo by Mitchell Ng Liang an on Unsplash

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Skepticism as News of Secretive India Crypto Bill Breaks

India is hit with its latest wave of speculations, as rumors of a full crypto ban emerge, yet remain unconfirmed by its reserve bank.

Those who mine, trade or own cryptocurrency in India are currently on the edge of their seats, as rumors keep swirling around a draft regulation called the Banning Cryptocurrencies and Regulation of Official Digital Currency Bill 2019. As its ominous title indicates, the bill allegedly calls for harsh penalties of up to 10 years in jail for those who deal in crypto, clearly intending to rid the country of digital tokens. However, whether the bill will become a law or not remains inconclusive, even after attempts of one of India’s premier blockchain lawyers to discover the truth.

April’s unveiling of a promising regulatory sandbox for blockchain by the Reserve Bank of India (RBI) contained the first hints of a crypto ban, with the rules making no mention of crypto in a thoroughly tight-lipped manner. This prompted lobbyists to call for the bank’s reconsideration, and likely fanned the flames of rumors about stricter measures inbound. These embers caught fire around the same time, when local publication The Economic Times suggested that several government departments had already agreed to the ban and were merely waiting for the correct time to announce it.

Following a complete lack of guidance on the claim, Indian blockchain and cryptocurrency lawyer Varun Sethi submitted an official request for information to the RBI. The RBI’s regulatory framework for blockchain innovation, as well as its ongoing advice to investors about crypto suggests that it has the authority to make these decisions — making it a logical target for Sethi’s information request. Strangely enough, when the report was released, the RBI stated unequivocally that it hadn’t received communication from the government on the matter.

Reading between the lines

India regulation timeline

There are some things to consider before assuming that India will ban cryptocurrencies. Notably, Sethi begins each request for information with a statement from “the article” (referring to The Economic Times’ piece published on April 26), which cannot be considered a primary source when it comes to financial regulation. Another reason to be skeptical is the language that the RBI uses when answering Sethi’s inquiries. The bank won’t lie on a request for information; it says a lot when, in the clearest terms possible, it states its complete absence of knowledge and that it hadn’t sent a memo or even met internally on the matter.

To believe that India will totally ban cryptocurrency requires one to suspend logic. The country is one of the most technologically progressive, and its recent blockchain regulations are optimistic. It makes sense that India would leave cryptocurrency out of its blockchain laws, because the two ideas (while related) are completely different. Sandeep Nailwal, co-founder and chief operating officer of Matic, an Indian-based solution to Ethereum’s decentralized scaling issues, told Cointelegraph:

“There is no information from trusted sources to support the statements made in this report and it’s completely contrary to the widespread support we are seeing for Blockchain technology in India. We fully believe that Indian regulatory bodies wish to foster upcoming technologies, and this includes blockchain and digital ledgers. There is strong backing within the Indian technology communities for these emerging technologies and we expect regulation will follow in due course to cement this.”

For India, crypto is an opportunity, not a threat

Not only would favorable cryptocurrency regulation help companies like Matic to continue to fund themselves and innovate, it would also provide a good platform for India’s digital rupee ambitions. Banning the infrastructure that would allow value to flow into a digital rupee (and give it relative value) would be counterproductive, and for this reason, many experts agree that a crypto ban was never in the cards. The legal tangles it would create (i.e., allowing one or some cryptos but not others) would waste time and brand India a poor target for blockchain investment.

Blockchain law expert and partner at the law firm Nir Porat and Co., Roni Berkowitz, noted:

“Criminal liability for using cryptocurrency on blockchain, while also leaving a loophole for a potential ‘digital Rupee’ will cause a regulatory blunder. It will create legislative inaccuracies that are more than blurry legal ideas, India will also be branded as an unattractive market. India should learn from other jurisdictions, like EU member states, how to regulate Blockchain and cryptocurrencies in a manner that is not only effective, but legally sound.”

For these reasons, Indians shouldn’t expect that their government will suddenly announce a ban on crypto and make the RBI enforce it. More likely are forthcoming regulations, whereby exchanges will help the government and the RBI to clamp down on tax evasion, wash trading and money laundering more effectively. By putting the burden of Anti-Money Laundering (AML) and Know Your Customer (KYC) procedures on exchanges and kicking out those that don’t follow the rules — something that already happened in the case of Coinome’s shuttering — the government can boost blockchain’s upsides (investment and innovation) and limit its downsides (fraud and a weaker rupee).

News of a delegation’s visit to Zug, Switzerland provides further evidence of India’s interest in a healthy embrace of blockchain and all that accompanies it. Zug hosted the group of Indian academics, economists and tech experts who were there to observe how public blockchains have evolved in the “Crypto Valley,” and how they could be applied in India. Upon the delegation’s return to India, around the same time as the RBI’s report, United States-India fellow from Georgetown University’s Masters in Public & Foreign Policy and delegation member Tanvi Ratna reported that “the Swiss focus on building conducive framework conditions is a big takeaway from this trip.”

Another delegation member indicated that Switzerland’s “approach is agnostic to the technology and is focused on creating an enabling framework for public blockchain. After quantifying the risks and benefits of the approach for the Indian ecosystem, we will convey it to policy makers and regulators.”

Clearly, there are things happening in the background that don’t lend credibility to the marketplace’s current level of fear, but it’s best to remain open to any possibility as Indian lawmakers deliberate.

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Bitcoin ‘FUD’: India’s Reserve Bank Denies Involvement in Crypto Ban

Bloomberg: India Looking to Jail Bitcoin, Crypto Users

On Friday, Bitcoin and crypto enthusiasts woke up to a harrowing piece of news. Reported first by Bloomberg Quint, India purportedly has plans to jail those who use digital assets in the nation. Citing a “draft bill”, the outlet explained that those who mine, hold, generate, transfer, dispose of, issue, or sell cryptocurrency will be subject to anywhere from one to ten years in the slammer. This exacerbates the current ban already in place, which shut down all cryptocurrency exchanges operating in the nation. The bill reads:

“[Offenses will be] cognizable and non-bailable… If any conduct is punishable under any other law, this Act will be in addition to, and not in derogation of such law.”

Harsh, ouch. Per Bloomberg, the Reserve Bank of India and its partners will also propose the creation of a “Digital Rupee” to fill in the void left by an all-out ban on Bitcoin.

This strategy has purportedly been “recommended by a panel headed by Economic Affairs Secretary Subhash Chandra Garg”, and has been backed by other governmental agencies.

This, if put in place, would seemingly be a massive blow to the Bitcoin ecosystem, as there are hundreds of millions in India without access to financial services that could use BTC and its ilk.

India’s Reserve Bank Denies Rumors

Despite this, the Reserve Bank has denied any involvement in any new crypto ban. In a statement issued June 4th (prior to this news), the central bank claimed that it is not aware of any new plan for a ban. They explain that they were not forwarded any draft bill, if it exists at all, from any fellow financial regulator in India, nor was in communication with any other agencies on the subject matter.

This doesn’t imply that the draft bill doesn’t exist though, yet the RBI should be involved if it truly is in the works.

Regardless, many note that if the ban was put in place — if it does exist after all — it may actually be a net benefit for the cryptocurrency space. This may sound absurd, but many truly believe this.

Responding to the Bloomberg Quint story, legendary cryptocurrency investor Barry Silbert claimed that the “ban” would “have the opposite of the desired effect on Bitcoin awareness and interest in the country”. This is seemingly in reference to the Streisand effect and the theory that consumers like to oppose government control in some settings.

Others corroborated this sentiment. Blockstream’s Samson Mow and Michael Goldstein both claimed that this would be much like an advertisement for Bitcoin in the nation, rather than a way to curb discussion and awareness about the cryptocurrency in general.

Photo by Charlie Costello on Unsplash

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Reserve Bank of India Denies Knowledge, Involvement in Draft Bill to Ban Crypto Entirely

The bank says it has not received any communication from the government about a draft bill that would ban cryptocurrencies.

The Reserve Bank of India (RBI) has denied having any knowledge or involvement in a draft government bill that would ban cryptocurrencies, an official document released on June 4 shows.

Varun Sethi, a lawyer specializing in blockchain, filed a Right to Information request with the RBI following a report by India media outlet the Economic Times in April that suggested several government departments have backed a complete ban on the “sale, purchase and issuance of all types of cryptocurrency.”

Although the RBI refused to answer some of Sethi’s questions, the bank confirmed it has had no communication from central government about the proposed law — and said it had not received a copy of the draft bill.

The bank refused to be drawn in on whether it was the relevant authority to take a decision on banning cryptocurrencies. However, the RBI said it has not endorsed such a ban to any government department, and that it had not received any written communication to suggest a government department endorsed such a move.

Sethi asked whether it was possible that such a draft bill could be passed without the consent of the RBI, but the bank declined to answer.

The RBI’s has played a central role in regulating cryptocurrencies and blockchain, as well as issuing advice to investors.

In April, the organization unveiled a regulatory sandbox that would enable blockchain products to be tested on a small number of consumers, but cryptocurrencies, exchanges and initial coin offerings were excluded. The decision prompted lobbying groups to urge the RBI to reconsider.

The world’s second-most populous nation has been slow to take a stance on cryptocurrency regulation, and the uncertainty has resulted in the closure of several Indian exchanges.

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Central Bank of Laos Issues Warning Against Using Cryptocurrency

The central bank of Laos has warned the public against the use, purchase or sale of digital currencies.

The central bank of Laos has warned the public against the use, purchase or sale of digital currencies, local news outlet Vientiane Times reported on May 21.

The Bank of the Lao PDR has issued a warning to financial market participants and the public against cryptocurrency transactions as they are considered illegal in the country. The bank previously banned financial institutions from conducting any operations with cryptocurrencies, as well as making investments in such an asset.

The bank is purportedly concerned about the anonymity of the sender and receiver in a cryptocurrency transaction, which it worries increases the risk of digital assets’ use in money laundering. A source familiar with the matter told Vientiane Times that authorities do not have a relevant security system to protect cryptocurrency owners.

While some countries like, Canada, Malta and Switzerland have embraced the new asset class to varying degrees, officials around the globe are still expressing skepticism toward crypto, while some hardliners call for outright bans.

In the United States, where the legal status of crypto can vary state-to-state, California Congressman Brad Sherman recently called for a full ban on cryptocurrencies. Sherman claimed that crypto presents a threat to the power of the U.S. dollar to affect world economic developments.

In April, Cointelegraph reported that the Indian government was considering a complete ban of cryptocurrencies under the Prevention of Money Laundering Act since it could purportedly be used for money laundering. The Ministry of Corporate Affairs reportedly stated that cryptocurrencies are used in fraudulent schemes to “defraud gullible investors”.

That same month, news broke that Pakistan — which banned cryptocurrency trading last April — is implementing new cryptocurrency regulations in an effort to improve its track record in fighting financial crime. The move was reportedly in part a reaction to demands from international monitoring body the Finance Action Task Force, which has repeatedly voiced concerns about cryptocurrencies’ role in terrorist financing.

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Chinese Crypto Scene: WeChat Asserts Bitcoin & Altcoin Related Transactions Are Verboten

China’s Regulators Clamp Down On Bitcoin & Crypto… Again

As you remember (or maybe not), China has long been an integral part of the crypto space. It is the home of Bitmain, a massive Bitcoin miner and ASIC manufacturer, and the nation housed many of the asset’s early adopters. However, over recent years, China’s governmental agencies have begun to crack down on this asset class, presumably due to the fact that analysis and research have indicated that locals are bypassing stringent capital controls with BTC.

This time, it seems that regulators are trying to stem the flow of domestic transactions related to cryptocurrency. In a policy update posted just recently, first spotted by Primitive Ventures’ Dovey Wan, merchants are disallowed from making or accepting transactions that relate to token issuance/crypto-related financing or Bitcoin trading activity, or else a ban will be instated.

As Wan explains, this ban may “impact local liquidity to some extent,” citing her experience and knowledge as an insider of the local cryptocurrency space. It is important to note that this move is very similar to Alipay’s purge of Bitcoin OTC accounts.

In response to this news, Changpeng “CZ” Zhao of Binance explained that this is a “classic example of short-term pain, long-term gain.” The exchange chief executive remarks that this “restriction of freedom” will push locals to adopt cryptocurrencies with time, especially as capital controls in the Asian nation continue to tighten.

Regardless, this is just an attempt from the Chinese government and related agencies to curb the propagation of Bitcoin. And as explained previously, this is far from the first time that such a crackdown has occurred.

Per previous reports from Ethereum World News, which covered this topic extensively, China’s National Fintech Risk office identified 124 cryptocurrency exchange platforms that were still available for Chinese citizens in late-2018. As China has banned overseas cryptocurrency exchanges time and time again, the country’s firewall quickly swallowed up access to these sites. Along with banning the aforementioned platforms, the governmental organization also noted that it plans to introduce monitoring systems to ensure no foreign exchanges sneak under China’s ‘great firewall’.

In related news, Chinese technology giant Tencent banned over eight crypto-centric news outlets on its WeChat mobile platform, which has become a primary mode of communication in the Asian region. Citing new governmental regulations, Tencent noted that it banned these accounts due to suspicions of “publishing information related to initial coin offerings (ICOs),” along with spreading crypto-related hype.  Last but not least, Beijing’s Chaoyang district has also revealed that it has banned local hotels, shopping malls and office buildings from hosting crypto-related events.

Mining Ban?

This news regarding WeChat comes just days after the National Development And Reform Commission (NDRC) of China was revealed to have intentions to ban Bitcoin-related mining activity. As we reported, the agency hinted at the idea that the mining of cryptocurrency may not be safe or conducive to the stability of China’s environment, which many have deemed to be false. The NDRC may also be bending to the wills of local financial regulators, who, as aforementioned, do not want digital asset usage in China to get out of hand.

Photo by Adi Constantin on Unsplash

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Chinese Social Media Giant WeChat Bans Crypto Transactions in Its Payment Policy

Chinese social media giant and payment service provider WeChat banned cryptocurrency transactions in its payments policy.

Chinese social media giant and payment service provider WeChat banned cryptocurrency transactions in its payments policy. Dovey Wan, founding partner of crypto investment firm Primitive, tweeted the news on May 7.

The tweet contained a screenshot of the policy changes, which intimates that users who engage in cryptocurrency trading will have their accounts terminated.

Wan expressed concern that since most over-the-counter transactions are happening in WeChat, “this may impact local liquidity to quite some extent.” WeChat is a popular messaging and payments service provider in China, also featuring game integrations.

The updated rules — coming into force on May 31 — state that “merchants may not engage in illegal transactions such as virtual currency,” the issuance of tokens, selling pornography or online gambling.

Changpeng Zhao, founder and CEO of major cryptocurrency exchange Binance, commented that he believes the restrictions have been forced on the company. Furthermore, Zhao also defined the developments “a classic example of short term pain, long term gain.” He explained:

“It is inconvenient for people short term, and they take a hit. But long term, it is precisely this type of restriction of freedom that will push people to use crypto. Not a bad thing.”

Lastly, he noted that it would be hard to beat the user experience offered by the WeChat payment services if it wasn’t for such restrictions.

WeChat Pay reportedly registered a total daily transaction volume of over 1 billion (currency unspecified), while the overall number of users allegedly reached 1.098 billion by the end of last year. According to technology news outlet TechNode, the app is also popular among older people, with 98.5% of Chinese people aged between 50 and 80 WeChat users.

As Cointelegraph reported last month, major Chinese city Guangzhou has issued a business license using blockchain and artificial intelligence technology also featuring a WeChat integration.

At the end of January, news broke that major WeChat Pay competitor Alipay and WeChat Pay reportedly requested that crypto exchange Huobi remove their payment services from its over-the-counter trading desk.

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Crypto Should be “Shut Down,” Nobel Prize Economist Says

Nobel Prize Economist, Joseph Stiglitz, does not believe crypto is a positive thing for society; in fact, he called for efforts to “shut them down”.

In an interview with CNBC, Stiglitz advocated the need to implement a digital money system. For him, the advantages of using electronic payments make these technologies a safer, more transparent and efficient way to carry out transactions when compared with traditional cash.

“I’ve been a great advocate of moving to an electronic payments mechanism. There are a lot of efficiencies. I think we can actually have a better regulated economy if we had all the data in real time, knowing what people are spending,”

However, he was emphatic in pointing out that while he
advocates electronic payments, cryptocurrencies are not the best
implementation:

“We have a very good currency so far; the currency’s been run in a very stable way, there’s no need for anyone go to a cryptocurrency

…I actually think we should shut down the cryptocurrencies.”

For the economist, the lack of control and regulation is extremely dangerous for the economic development of our society. Stiglitz explains that because there were not enough means to trace the funds, the use of cryptocurrencies made it very easy to engage in illicit activities such as money laundering, tax evasion, etc.

Crypto = Dark Platform

Joseph Stiglitz said he was concerned that people were “moving things off of a transparent platform and into a dark platform.” He commented that according to his research, an increasing percentage of the global wealth was being stored in these dark havens.

As reported by our partner site Crypto Crimson, Stiglitz’s findings are congruent with the results of a survey conducted by deVere on more than 700 high-net-worth individuals. It concluded that about 70% of people with more than 1.3M USD in investments own some crypto or are interested in investing in cryptocurrencies and blockchain technologies.

However, those who support the use and adoption of
cryptocurrencies defend this technology from Stiglitz’s arguments.

First, many argue that due to its decentralized nature, it
is impossible for a government or central entity to “shut down” crypto.

Similarly, neither the blockchain nor cryptos are a “dark haven”. In fact, the blockchain is much more transparent and auditable than traditional banking operations. Everyone can see the movements that happen on the blockchain, now, dark markets and other similarly ilicit platforms exist and take advantage of these technologies but undoubtedly criminals move more resources through fiat money than through cryptocurrencies.

And this is a fact proved by the European Union Agency for Law Enforcemente Cooperation (EUROPOL)

The post Crypto Should be “Shut Down,” Nobel Prize Economist Says appeared first on Ethereum World News.

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Coinbase Bans Personal Account of British Right-Wing Pundit Milo Yiannopoulos

U.S. major cryptocurrency exchange Coinbase has barred British right-wing pundit Milo Yiannopoulos from its platform.

American major cryptocurrency exchange Coinbase has barred British right-wing pundit Milo Yiannopoulos from its platform, Yiannopoulos stated in a Gab post on May 3.

Yiannopoulos is a well-known political commentator and public speaker, espousing controversial far-right views and describing himself as a “cultural libertarian”. Previously, Yiannopoulos used to be an editor for syndicated American news and opinion website Breitbart News.

Yiannopoulos’ account on Coinbase was reportedly closed within three minutes:

Screenshot of Yiannopoulos Gab post

Screenshot of Yiannopoulos Gab post. Source: Gab

Yiannopoulos was previously banned by social media and networking platforms Facebook, as well as its subsidiary Instagram, and Twitter, according to the Guardian. A Facebook spokesperson reportedly told the Guardian that “we’ve always banned individuals or organizations that promote or engage in violence and hate, regardless of ideology. The process for evaluating potential violators is extensive and it is what led us to our decision to remove these accounts today.”

In January, Coinbase reportedly terminated the personal merchant account of Gab founder Andrew Torba. A possible reason why it is hard for Gab to obtain a payment processor is purportedly its reputation for being the social network for people banned from mainstream platforms for hate speech.

Moreover, last April Coinbase blocked the account of WikiLeaks Shop, the merchandise arm of international anonymous publishing non-profit WikiLeaks, due to terms of service violations. Last December, Julian Assange, founder of Wikileaks and international exile, urged donors to contribute to the online publication by using cryptocurrencies in order to skirt the financial ‘blockade’ by national governments.

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Microsoft’s Bing Blocked Over Five Million Cryptocurrency-Related Ads in 2018

Microsoft-owned search engine and advertisement platform Bing noted that it blocked over five million cryptocurrency-related ads last year.

Microsoft-owned search engine and advertisement platform Bing noted that it blocked over five million cryptocurrency-related ads last year in its “Ad quality year in review 2018” report published on March 25.

Bing notes that the pseudo-anonymity of cryptocurrencies such as Bitcoin (BTC) “made cryptocurrency a prime target for fraudsters and scam artists to defraud end-users.” Bing claims that this is the reason for the ban of cryptocurrency-related content from its advertising platform that resulted in over five million ads being blocked.

Bing also notes that its ban against weapon advertisement resulted in over 18 million ads being blocked alongside over 5,000 websites. Lastly, the company claims that its efforts to fight tech scams lead to the closure of over 12,000 Bing Ads accounts.

In May last year, Bing joined other internet giants in announcing it would ban cryptocurrency-related advertisements on its network by July 2018. The company then stated in an official post:

“Because cryptocurrency and related products are not regulated, we have found them to present a possible elevated risk to our users with the potential for bad actors to participate in predatory behaviors, or otherwise scam consumers.”

Before Bing, Facebook banned cryptocurrency ads in January 2018, as did Google in March of the same year. Twitter soon followed with a ban on advertising for initial coin offerings (ICO) and token sales.

While the firms have previously introduced bans on crypto content, those policies have not necessarily reflected the thoughts of their top executives. Twitter CEO Jack Dorsey is a vocal Bitcoin advocate. Facebook CEO Mark Zuckerberg has also expressed interest in digital assets, telling CNBC last year:

“There are important counter-trends to this, like encryption and cryptocurrency, that take power from centralized systems and put it back into people’s hands. I’m interested to go deeper and study the positive and negative aspects of these technologies, and how best to use them in our services.”