Leave Banking, Hawk Cryptocurrencies for a Living

♠ Posted by Emmanuel in at 8/03/2017 04:56:00 PM
There's plenty of these already--with boatloads more to come.
Manias in the business world are nothing new. In the technology realm, we've had any number of these already like the dot-com boom followed by the dot-com bust earlier in this century. In the realm of finance, the latest and greatest gold rush concerns the issuance of cryptocurrencies. Instead of initial public offerings of shares of stock, the marquee events here are initial coin offerings (ICOs). As no shortage of issuers and investors buy the gospel (or Kool-Aid for skeptics) that cryptocurrencies represent the future widely-used form of money, there is a lot to be made (or lost).

A surefire sign of optimism about opportunities is when folks leave otherwise well-paying if predictable jobs for the Wild West of trading these largely unregulated instruments. Bloomberg says that's already happening with many ex-bankers setting their sights on the larger promised returns of virtual monies:
From Hong Kong and Beijing to London, accomplished financiers are abandoning lucrative careers to plunge into the murky world of ICOs, a way to amass quick money by selling digital tokens to investors sans banks or regulators. Cut out of the action, a growing cohort of banking professionals are instead applying their talents toward buying or hawking cryptocurrency.

They’re going in with eyes wide open. For [ex-banker Richard] Liu, who put together some of China’s biggest tech deals in his old job, the chance to shape the nascent arena outweighs the dangers of a market crash or crackdown. Loosely akin to IPOs, ICOs have raised millions from investors hoping to get in early on the next bitcoin or ether, and their unchecked growth over the past year is such that they’ve drawn comparisons to the first ill-fated dot-com boom. Yet with stratospheric bonuses largely a thing of the past, the allure of an incandescent new arena far from financial red-tape has proven irresistible to some.

“Traditional investment banks and VCs need to monitor this space closely, it could become very big,” said the 30-year-old partner at $50 million hedge fund FBG Capital, which has backed about 20 ICOs. He’s off to a quick start, getting in on this year’s largest sale: Tezos, a smart contracts platform that raised $200 million to outstrip the average Hong Kong IPO size this year of around $31 million.
That said, the potential for huge gains trading these monies comes with correspondingly huge risks as their critics point out:
Critics say many ICOs are built on little more than hyperactive imaginations. A cross between crowdfunding and an initial public offering, they involve the sale of virtual coins mostly based on the ethereum blockchain, similar to the technology that underpins bitcoin. But unlike a traditional IPO in which buyers get shares, getting behind a startup’s ICO nets you virtual tokens -- like mini-cryptocurrencies -- unique to the issuing company or its network. That means they grow in value only if the startup’s business or network proves viable, attracting more people and boosting liquidity.

That’s a big if, and the sheer profusion of untested concepts has spurred talk of a bubble. The U.S. Securities and Exchange Commission signaled greater scrutiny of the red-hot sector when it warned on Tuesday that ICOs may be considered securities, though it stopped short of suggesting a broader clampdown. The regulator however did reaffirm its focus on protecting investors: part of the appeal of ICOs lies in the fact that -- for now -- anyone with a bold idea can raise money from anybody.
Actually, the dot-com boom may illustrate the future of these virtual monies. Most startups of course went bust. However, those that survived for the longer run eventually did well enough and have introduced widely-adopted consumer standards. The survivors are exceedingly well-known including the likes of Amazon, EBay, Google, and so on. Like before, these newfangled entities cannot survive on novelty alone but must offer some sort of unique selling proposition to customers.

It will take some time to sort the Amazons from the Pets.coms of the cryptocurrency world. Meanwhile, there apparently be many gamblers drawn to this realm--even from the relatively stolid world of banking.

Blockaded Qatar Takes Saudi, UAE to WTO

♠ Posted by Emmanuel in , at 8/01/2017 04:57:00 PM
Of course Qatar knows the WTO. The current [?] WTO negotiations were initiated in the capital of Doha.
I am fascinated with the blockade on Qatar by fellow Gulf Cooperation Council (GCC) countries Saudi Arabia, the United Arab Emirates, and Bahrain, supposedly for supporting "terror." For the country where most 9/11 attackers came from and which has funded fundamentalist education throughout the world, Saudi Arabia is particularly noteworthy. My belief is closer in line with those who believe Qatar acts more as a neutral ground for those wary of Middle East authoritarianism--even if these folks may include Hamas and Hezbollah who have representative offices in Qatar.

There is also the not-so-small issue of broadcast network al-Jazeera, which is widely viewed not just in the region but throughout the world. Its continuous criticism of other GCC countries rankles the others, and I must also point out that Qatar is not entirely faultless in its media coverage. After all, Qatar is just like the rest of them: As yet another absolute monarchy, Qatar is hardly a bastion of democracy. As al-Jazeera viewers would note, Qatar's leaders--who set up the network in the first place--are never criticized.

Having failed so far diplomatically in resolving this dispute--the United States which has bases in Qatar but nonetheless was bashed by Trump as a state sponsor of terror has been of little use--Qatar now turns to international organizations to help its cause:
Qatar has lodged a formal complaint with the World Trade Organisation against the “illegal siege” imposed by four Arab neighbours that have accused the Gulf state of sponsoring terrorism. The complaint, lodged with the WTO’s dispute-settlement body, described the embargo as “unprecedented”, accusing Saudi Arabia, the United Arab Emirates, Egypt and Bahrain of “violating the WTO’s core laws and conventions on trade of goods and services, and trade-related aspects of intellectual property,” the ministry of economy and commerce said in a statement on Monday.

On June 5, the quartet of Arab allies cut off air, sea and land links to their gas-rich neighbour, closing off airspace to Qatar-bound flights, refusing to handle goods bound for the gas-rich state and cutting diplomatic ties. While Qatar has shifted supply chains, bringing in food from Turkey and Iran and using Omani ports, its imports nonetheless slumped 40 per cent in June as the embargo hit home. “The arbitrary measures taken by the siege countries are a clear violation of the provisions and conventions of international trade law,” said Sheikh Ahmed bin Jassem bin Mohammed Al Thani, the minister of economy and commerce. “Furthermore, the illegal siege is unprecedented in the framework of economic blocs.”
The complaint at the ICAO will also mirror the WTO complaints since Qatar has had a very hard time sending and receiving Qatar Airlines and other flights with the likes of UAE closing their airspace to Qatar. While I have little doubt that Qatar's case is a fairly good one against such a wide range of sanctions without apparent cause--especially trade-related ones--you have to wonder: Given that WTO cases are usually resolved over a year's time, will there still be much of a commercial center left of Qatar if things take that long to resolve?

Ultimately, I believe that a diplomatic solution, whoever may broker it, will need to be found. Litigation will only get you so far and may leave a bad aftertaste besides.