TR 21.09


In light of the UK’s Treasury Committee releasing a strong recommendation to regulate crypto-assets, it is time for us to make our view of the current regulatory landscape abundantly clear.

Crowdfunding in Europe has existed since 2011. Therefore, regulation for companies raising capital from the public (aka, ICOs) has also existed. However, startups have just chosen to ignore it. Lawyers have worked around it - and in the global fight for talent, capital and the next 25 years of technology - governments have pretended it doesn’t exist.

We do not need and have never needed new regulation.

Since 2011, our estimate is that around €3 billion has been raised for venture assets through crowdfunding platforms. The largest, Crowdcube, has raised €550M to date. As these figures are substantially inflated by private tickets of funds, the true figure for retail crowdfunding is significantly less than half that - potentially even less than €1bn.

The true retail appetite to invest in venture style assets is perhaps €20m/month. The retail interest in ICOs over the last 18 months represents the propensity to gamble - not a pent up demand for democratised access to venture.

You can easily raise €8m from the public in a regulation-lite but compliant manner in Europe. If you want to raise more, it rightfully falls under the full Prospectus Rules. Complying with that will still cost less than a token issuance. The instrument you’re raising for - ‘utility’, ‘payment’, ‘security’ is practically irrelevant. We do not need any additional rules.

Why then, are we trying to reinvent the wheel?


 Overview: The Dusk Network is a compliant privacy blockchain offering a new confidential token standard (XST). As a result, security token offerings could run on top of the Dusk protocol, with built-in KYC/AML compliance to assist in the creation of a liquid asset class of securities that was previously non-existent. Dusk Network focuses on payments, p2p communication and asset ownership transfer.

Why are we talking about Dusk? The current DLT market is over-saturated and underperforms. More solutions arise, but the same five continue to monopolise their respective sub-markets: Ethereum, EOS, and NEO have clear barriers to any meaningful adoption (scalability; privacy; and security, respectively). Monero and Zcash are impressive privacy protocols, but their narrow ‘payments-only’ functionality limits their scope. Many of these platforms are under careful regulatory scrutiny, yet have poor compliance systems in place. Many projects have (importantly) focused on targeting developers, however, there is a clear void in how these platforms can be best leveraged for businesses and consumers alike. This is where the Dusk Network comes into its own.

Dusk works in the real world. They have a unique approach to balancing privacy, compliance and scalability that enables new functionality, for example, video conferencing - secured through complex elliptic-curve cryptography and unique solutions into data tunnelling. Dusk applies wherever data is transferred - including file and content transmission.

Transactions per second (TPS): given Dusk’s adaptive block size, the question of TPS is largely irrelevant. However, for argument’s sake, assume 10,000-50,000 TPS (Visa handles approximately 1,700 TPS on average each day but its network can theoretically handle up to 56,000 TPS) with a 1MB fixed block size.

Consensus Mechanism: Dusk’s Segregated Byzantine Agreement (SBA*) consensus mechanism aims to solve the key problems associated with PoW and PoS consensus mechanisms (namely excessive energy consumption and centralisation, amongst many) by (1) using Proof-Of-Blind to provide the sybil attack resilience of PoS with anonymity; (2) segregating the operations of block-generation and validation/voting/notarization to make it possible to create the first economy resistant to centralised pooling attempts; and (3) having in built resistance to nothing-at-stake and long-range-attacks because of its voting system being engineered to avoid chain divergence.

Scalability: Dusk’s consensus mechanism is highly scalable. By segregating tasks and actors, the already efficient pBFT class of consensus mechanisms, is made even faster. It has an adaptive block size, with enough throughput capacity to meet all plausible transaction requirements for all of its use cases on a global scale.
Status: The private sale is taking place now, the devnet with Provisioners, wallets and consensus is to be released in December 2018, full testnet in Q1 2019 and the mainnet launch is due for Q2 2019.


  • Vision Hill research on “Introducing a Crypto Benchmark Framework”.


  • A bug was found in Bitcoin Core that had the potential to crash the whole network.



  • FOAM a project aiming to build a decentralised global mapping service is now live on Ethereum. FOAM, which raised $16.5 million through its token sale on Token Foundry in August, is already seeing its first users beginning to populate the map with points of interest through the use of the FOAM token. The project aims to solve vulnerabilities and reliability problems that exist in current centralised mapping services like GPS.

  • Institutional cryptocurrency exchange Seed CX has raised $15 million in a Series B round led by Bain Capital. The exchange offers trading and settlement services for spot markets and other regulated derivatives and hopes to offer trading services for digital assets that are similar to those offered for other existing commodities and equities. The institutional focused exchange has applied for a BitLicense through the New York Department of Financial Services and a broker-dealer registration through the Financial Industry Regulatory Authority.


We will be on stage at the European Investment Summit and Blockchain Live 2018 next week. For those of you attending, we hope to see you there!

Finovate Fall 2018 - New York City, USA - Sep 24 - 27, 2018

European Investment Summit - London, UK - Sep 25 - 25, 2018

Technology & Innovation Risk 2018 - London, UK - Sep 25 - 26, 2018

Cryptonite World Tour - San Francisco, CA, USA - Sep 26 - 26, 2018

Blockchain Live 2018 - London, UK - Sep 26 - 26, 2018

BLOCFEST - A Blockchain Festival & Conference - Kuala Lumpur, Malaysia - Sep 26 - 27, 2018


Amsterdam // Barcelona // Beijing // Berlin // Boston // Brisbane // Bristol // Cambridge // Den Haag // Edinburgh // Hong Kong // Iasi // Jakarta // Krakow // Kuala Lumpur // Lisbon // London // Los Angeles // Melbourne // Munchen // New York // Oxford // Paris // Rotterdam // San Francisco // Singapore // Sydney // Utrecht

James Roy PoulterComment