the data is anonymised, that will pose areal headache for data supervisory au-thorities.The next challenge is the regulation of

the cyber risk posed by the payments net-work surrounding Libra. The UK Network& Information Systems Regulations(2018) (NIS) do not apply to the UK finan-cial services sector, which the financialregulators felt they already had a robusthandle on. Past fines for failures by au-thorised firms due to cyber-attacks havebeen based on the FCA’s Principles forBusiness, the cardinal rules of UK finan-cial business conduct. The question fromhere will be whether the Libra payment

network is a digital service provider,thereby falling under the remit of NIS, ora payment system or other financial serv-ice which would require Bank of Englandor FCA supervision.The potential for Facebook’s Libra cur-

rency to become a globally-accepted cur-rency over time is exciting, but it willrequire regulators to co-operate witheach other and to adopt a consistent ap-proach, to both overseeing Libra’s opera-tion and ensuring the protection of users’financial data.

Claude Brown, Howard WomersleySmith and Tim Dolan, Partners at ReedSmith, in conversation with JamesBowater. For more information seehttps://www.reedsmith.com

IMPORTANT INFORMATION: THE VIEWSAND OPINIONS PROVIDED BY CITY A.M.'SCRYPTO INSIDER AND IN THE CRYPTO A.M.SECTION SHOULD NOT BE TAKEN ASINVESTMENT OR FINANCIAL ADVICE.ALWAYS CONSULT WITH YOUR FINANCIAL ADVISOR.

The ME Group is a LegalTech providerof dispute analysis andquantification, litigation funding,

insurance and legal representation forconsumers facing complex legal problems.The Group’s CEO, Rob Cooper, togetherwith his co-founders John Coxhead andCraig Cornick, have just returned from the9th Global Family Office InvestmentSummit in Monaco where they spoke aboutthe Group’s journey of rapid growth tobecome a market leader in its sector.The ME Group mission is to improve the

quality and reduce the cost of disputeresolution for all parties through the use ofLegalTech. Speaking at the summit RobCooper explained some of the manychallenges faced by those involved in adispute.“Equality of Arms is part of the right to a

fair trial, a right embedded in the EuropeanConvention on Human Rights. However formany people involved in a dispute thereoften feels like there is a significant

imbalance in the power of the parties.With significant changes to the legal

industry, including the removal of most legalaid for civil cases, those who are financiallyvulnerable stand little chance of affordinglegal representation and other legal costsFor large disputes, often involving

businesses or high-net worth individuals,litigation funding can bring greater balancebetween the parties by facilitating access tolegal representation that would otherwise

16 TUESDAY 25 JUNE 2019FEATURE CITYAM.COM 17TUESDAY 25 JUNE 2019 FEATURECITYAM.COM

bination of credit and debit cards, run-ning multiple accounts, and buying andselling things to others who bank else-where. The prospect of having a data har-vesting business that not only sees thepayment flows from consumer to re-tailer, but also between retailers andusers’ spending habits with little dataleakage, is an appealing prospect.The question will arise as to whether the

payments data collected by Libraamounts to personal data and is thereforesubject to the famous EU GDPR. Due totheir sizeable subscriber base, Facebookand other social media platforms only

Tonight in London, at the famousAmerican steakhouse Smith &Wollensky, I will be hosting the Crypto

AM Keynote, Panel & Networking Event withKeynote Speakers Naeem Aslam, ChiefMarket Analyst of ThinkMarkets and DanielDoll-Steinberg, Co-Founder of the Atari Token.On the panel will be representatives of Nodal Labs,CDAX, Craft Coin Company and Wirex. There are a few places leftand it’s free to attend but by application only. Please email me yourinterest at CryptoInsider@cityam.comThe Summer Solstice was celebrated in style with an explosion of

positivity in the Crypto markets. I looked back at previous editionsof Crypto AM (www.cityam.com/crypto-insider) and noted thatsince I started publishing my price watch six months ago thatBitcoin (BTC) has risen from US$3,275.97 to its currentUS$10,809.20, Ethereum (ETH) from US$83.81 to its currentUS$306.99 and the crypto market cap has more than triple sized toUS$325.51bn!Since last week’s Crypto AM, BTC has been testing, breaching,

falling back and punching through the $11,000 resistance markand, at the time of writing, is trading at US$10,809.20. ETH is atUS$306.99; Ripple (XRP) is at US$0.4611; Binance (BNB) is atUS$36.87 and Cardano (ADA) is at US$0.09640. Overall Market Capis US325.52bn (data source: www.CryptoCompare.com)It is impossible to ignore the biggest news of last week which is

that Facebook officially revealed Libra and Calibra. As mentionedabove, the markets have been very buoyant and many observersput it down in part to the Libra Effect. I don’t propose to address theimpact that Libra is having as I have invited a number very brightpeople to share their thoughts in this very ‘Libra dominated edition of Crypto AM. What I will say though is

that even if Libra is not a true cryptocurrency it doesn’t matter,because what this announcement has already done is ignite furiousdebate and highlighted how broken the legacy banking system inserving the unbanked. So I for one very much welcome thisaddition to the fold.I’m very pleased to be taking part in an exclusive event called

‘Tokenise It!’ supported by everiToken, Crypto AM, KuCoinExchange, SMC Capital and Obsidian Capital (Crypto AM contributorArnie Hill is the CEO). I will be taking part in a fireside chat with somespecial guests. In the run up I’ve had the pleasure of meeting Brady Luo the Co-

Founder & CEO of everiToken, a project that is achieving that holiestof grails: speed. Measured in Transfers Per Second (TPS) thenetwork runs at 10,000TPS which compares to EOS at 4,000 andEthereum at 25. If you’d like to join me on Friday, 28th June at 1Wimpole Street please register at bit.ly/tokenlondon Doors open at17:30 - see you there!

need a kernel of information to identifyan individual for targeted advertising. Im-portantly, Facebook will only be allowedto use that personal data for the purposesfor which it was initially collected. We arestarting to see examples, in the form ofcomplaints to data supervisory authori-ties and litigation, where that personaldata is shared (leaked) with another func-tion or company and used for an entirelydifferent purpose without justification.An individual’s consumer behaviour de-rived from the payments data on the scaleintended by Libra will be a frightening in-sight into our lives, regardless of whether

Historically, financial regulatorsof any hue have divided theirroles to reflect their marketsand constituents. Centralbankers examine currencies

and the systemic stability of the financialsystem; securities and banking regulatorsfocus on wholesale markets; financialconduct regulators pay attention to con-sumer finance. As markets globalise, theregulators should in theory collaborateacross nations and economic blocks. Thathas always been financial regulation 101.This leads to an ambivalent attitude to-

wards cryptocurrencies. Consumer-ori-ented regulators understandably fretabout frauds and criminal usage, as partof their remit to ensure that consumersare protected. Meanwhile, centralbankers are dismissive because, to date,cryptocurrencies are minuscule relativeto established fiat currencies.However, what happens when the be-

hemoths of the social media worldlaunch their own currencies? Suddenly,size matters. Perhaps it is unkind to classthese social media currencies as cryp-tocurrencies, given their clearly delin-eated purpose. However, they have thepotential to develop into an extremelypopular payment medium, that sits out-side established financial markets. So,what’s a regulator to do?The first thing is not to panic, as there

are established regulatory frameworksfor payment systems and services - suchas the EU Payment Services Directive andUS Money Transmitters Licence regime -that regulators can adapt to a closed looppayment system. Many regulators canalso designate financial systems “system-ically important,” and subject them to di-rect oversight. Of course, the globalnature of a social media currency will re-quire collaboration and harmonisationacross various regulatory regimes. Whilstthis may be challenging, it is not impos-sible.For the central bankers, however, a dif-

ferent problem exists. Although some,such as Mark Carney, have been callingfor a more coordinated approach to cryp-tocurrencies, the general approach isthat they are not “real money” and there-fore not significant enough to warrantintervention. With the possibility of a so-

cial media currency being developed ona scale to parallel the conventional cur-rency system, the questions are whetherthe central banks should seek to bring so-cial media currencies within their baili-wicks and, if so, how? The prospect ofregulating a social media platform as acredit institution is daunting and it isquestionable whether it could be donewithout the cooperation of the platformitself. However, the cloak of acceptanceand respectability may prove to be suffi-cient incentive, encouraging user confi-dence in the currency.Calm, collaboration and cooperation

may facilitate the induction of socialmedia currencies into the financial sys-tem, however whilst the ostensible pur-pose of social media currencies may bethe facilitation of payments, there are ul-terior uses – prime amongst which is theharvesting of data. Social media plat-forms already acquire and manipulatepersonal data; the addition of personal fi-nancial data takes the offering to anotherlevel. In a conventional banking environ-ment, data on spending habits is in-evitably incomplete. Customers haveirritating habits such as taking cash outof ATMs, effecting payments using a com-

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In association with

CITY A.M.’SCRYPTO INSIDER

Crypto A.M. shines its Spotlighton ME Group

@CityAm_CryptoE:CryptoInsider@cityam.com

JAMES BOWATER

PARTNER CONTENT

Our series on AI, Blockchain, Cryptoassets, DLT and Tokenisation

Love them or Hate them Facebookhas changed the game. Libra coin iswhat every alt coin wishes it could

be. An amazing collection of payingpartners that will act as nodes, provideliquidity for the token, and eventuallygovern the project. Combined with ac-cess to over 2 billion people and,providers, Libra shows what projectscan be when scale is involved. It is im-portant is to look at Libra not throughthe lens of a Western crypto earlyadopter, but through that of a memberof a future global economy.In the near term Libra coin allows

Facebook to implement a global versionof WeChat. If you haven't used WeChat,it is hard to understand how dominantand pervasive it is. So, why can't Face-book just launch the same functionalx-ity? Why does Libra need to exist?Simply put, WeChat runs on RMB. Face-book’s 2.5 billion active users span hun-dreds of countries and currencies. Librawill allow Facebook to provide similar,seamless functionality without trippingup over the global payments system.The involvement of Stripe and Visamakes clear that Libra will be fungibleboth on and off line.Sitting in London with our easy to set

up and use bank accounts it is temptingto dismiss this kind of innovation asbandwagon jumping. I think it is revo-lutionary. Libra’s website makes it clearthat they see the unbanked as their firstchallenge. In countries such as Indiathere are more smartphones than thereare bank accounts. From 2020 un-banked users will be able to set up theequivalent of account on their mobileusing their PAN card (a type of ID all In-dians carry) and suddenly they will existin the financial system. This is huge.People will work, be paid cash, and

convert to Libra via the local store. Thisopens up untold opportunities insteadof remaining economically restricted to

their immediate area. Think this willnot happen? Just look at mPesa inKenya. Libra will be cheaper, faster, ubiq-uitous and global. Facebook do notwant to own these services. By makingLibra programmable, they are bankingon entrepreneurs building on top of it.Many dismiss Libra as an evil plan by

Facebook. Virtue signalling abounds bypeople condemning an initiative theydon’t want to understand. Libra doesnot pretend it is a decentralized system,but have laid out a clear roadmap toproof-of-stake. They are even more clearthat this is not about marrying data tofinancial transactions - undoubtedlyothers will, but this is not their end.Facebook was founded on the notion ofconnecting the world. Libra is a logicalnext step.Facebook will benefit if this is a suc-

cess. But they are not acting as a rentseeking centralised entity. So manyblockchain businesses have preached adecentralised utopia, accessible only ifyou recentralise all the money to theirpockets. Libra has been designed to bebuilt upon, any profit Facebook makeswill be reward for their connecting ofover 2 billion people. It is the rails uponwhich crypto will live or die.Many of the mutterings across the

cryptosphere remind me of angstyteenagers upset their favourite band ispopular. Crypto and blockchain are notsingle entities. They are a paradigmshift of technology and economic phi-losophy. Importantly, 99.99% of peopledo not care what the technology is.Libra will deliver the users, developers,partners, and network needed to see ifwe can deliver on all of the promiseswe’ve made about blockchain. It’s struc-ture, and arrival, marks the time forbuilding real companies.

James Tabor, Automat VChttp://linkedin.com/in/james-tabor-8009572

Last week saw the heavily-anticipatedFacebook Libra cryptocurrency andblockchain announced, complete with

a white paper and accompanying wallet,named Calibra. The new stablecoin is to bebacked by a basket of fiat currencies and willbe managed by a Geneva-based non-profit -with founding members including Visa,Paypal, Uber and Coinbase. The plansalmost immediately sparked a regulatorybacklash as lawmakers in the US and Francevoiced their opinion that the Libra plansshould be stopped in their tracks. Bitcoin meanwhile had a stellar week,

soaring over the weekend past the keyresistance level at $10,000, before crossingthe $11,000 mark - reaching highs not seensince January 2018. Altcoins also sawimpressive gains, with ethereum (ETH)surging past the $300 mark - a price it lasttraded at in August 2018.Quadriga CX, the Canadian cryptocurrency

exchange that collapsed after the death ofits CEO and founder in 2018, may have

committed fraud according to a reportpublished last week by EY. Aside from losing$190 million of customer funds, auditorsalso reported that the founder lost millionsof dollars by margin trading on otherexchanges with funds taken fromQuadrigaCX.In response to the proliferation of

problematic exchanges such as QuadrigaCX,CryptoCompare has launched a newExchange Benchmarking Tool to revealtrusted exchanges. Ranking exchangesacross several metrics from geography toteam and market quality, the new toolarrives at a notion of “trusted volume” forexchanges ranked from AA to B. In other news, Algorand, the proof-of-

stake-based blockchain from respectedcryptographer Silvio Micali, completed itstoken sale. Using a Dutch auction, the Algotokens were sold at a value of $2.40 - raising$60 million. The token sale gave the projectan implied market cap of $24 billion - not faroff that of leading altcoin Ethereum.

CRYPTOCOMPARE MARKET VIEW

Facebook has changedthe game with Libra

Bitcoin Soars Past $10,000 asFacebook Libra Announced

Our use of AI acrossthe Group plays asignificant part in

unlocking newopportunities

Cryptocurrency and Blockchain gohand in hand right? Actually, thereare a plethora of use cases for

enterprise Blockchain that does notrequire any token or crypto.In 2016/17 we saw a glut of companies

utilising Blockchain purely as a reasonto justify using a token and raise aboatload of money through an ICO. Inmost cases, it was an attempt to deliveron their project and avoid the wholeventure capital conversation. VCsrequire thorough due diligence onteams and projects and regulatorsrequire substantial filing and reportingwhen raising funds from the generalpublic.If you are a Twitter user you’ll see lots

of talk, debate and arguments overcryptocurrency and which ones havevalue, and very little discussion aroundenterprise blockchain – Blockchainwithout crypto just isn’t anywhere nearas exciting…Enterprise Blockchain will surely be

here well beyond most tokens in themarket today. I would also argue thataiming to solve food supply chaintransparency, reduce oceanic shippingtimes, or prevention of blood diamondsentering the market are far moreimportant things that Blockchain canhelp solve – and none of this requires anonsense token in the ecosystem.When you understand that Blockchain

is little more than a fancy database to

record ownership (or custody) of a givenitem, and then apply that to placeswhere trust is low, it’s easy to see howadding in a token just creates multiplecomplexities that aren’t required.If you’re considering doing a

Blockchain POC to solve industry woesthat are awash in whatever industry youwork in, focus on how a shared ledgerwith common and agreed standards (toact as a central source of truth), is ableto deal with this and forget all about theidea of tokens or coins – it’s asmokescreen.

Get in touch with usinfo@blockchainrookies.com / Twitter @igetblockchain

CRYPTO A.M. INDUSTRY VOICES

What happens whensocial media

behemoths launchtheir own currencies?

Jon Walsh, Associate Partner Blockchain Rookies

CRYPTO NOT REQUIRED

Rob Cooper, Chief Executive Officer, ME Group

areas, the Group uses its LegalTech toappraise the expected outcome of a disputeand the level of damages that should beawarded. That appraisal is undertaken inminutes and the Group is able to supportlarge volumes of disputes. Not only doesthis mean that the cost of disputeresolution is reduced for all parties, it alsomeans it happens quicker, and that theGroup’s litigation funding and insuranceofferings can be opened up to markets anddispute types that would not otherwise beaccessible.Talking about the Group’s future growth

plans Cooper commented:“Our use of AI across the Group plays a

significant part in unlocking newopportunities both in the UK and abroad.As we develop our LegalTech into moredispute areas we are able to identify morepeople that we can give access to justice.That in turn enables us to safely deploymore capital in both litigation funding andinsurance.As we look to the future the tokenisation

of investor opportunities in our sector issomething we’re taking a close look at. Ahigh-yield asset that is uncorrelated tonormal economic cycles is likely to be anattractive proposition, and our LegalTechwould ensure such tokens are underpinnedby high-quality assets that are effectivelymanaged through to realisation.”

More information can be found atwww.megroupholdings.co.uk

not be available. However litigationfunding is often cost prohibitive in smallerdisputes, because the litigation funder hasto pass on the cost of undertaking their duediligence on the likelihood of the dispute

succeeding.”This is where ME Group’s proprietary

LegalTech is revolutionising the legalservices industry for the benefit of allstakeholders. Operating in specific dispute

LIBRA: WEIGHING THECONSEQUENCESFOR REGULATORS