Arturo Portilla Profile picture
Opinions are my own. Mexican tax and fintech lawyer. I tweet mostly about the intersection between fintech and blockchain. Early stage tech/fintech investor.
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12 Jul
As account portability becomes the the standard in financial services, community ownership (i.e. providing customers with exposure the growth of the platform) gains ground as one of the most important factors considered by customers when deciding where to host their funds.
In other words, account portability turns equity crowdfunding into a competitive advantage vis-à-vis VC funding, as it offers the possibility to build loyalty amongst crowd investors and reduce churn rates.
Which potentially gives rise to an interesting, yet foreseeably frustrating phenomenon.

Whilst consumer-facing startups have incentives to open its ownership structures to their communities, not so much the back-end, infrastructure or B2B focused startups.
Read 5 tweets
8 Jul
What. the. absolute. hell.

Please tell me this is not actually happening.
Circle takes dollars

Circle issues USDC

Circle invests dollars in Bitcoin collateralised yield products.

Circle transfers risk to USDC holders.

USDC holders repackage Bitcoin risk and pledge it as collateral in DeFi yield products.

Please tell me this is not true.
If this is true and Circle manages to go public, I'm absolutely done trying to believe securities regulators care about their mandate to protect investors.
Read 4 tweets
6 Jul
Any papers/research out there on the limitations to store digital content on the blockchain? — Would like to understand how such limitations could affect NFTs in terms of ownership trustlessness, decentralization and self-sovereignity.
When it comes to NFTs, the real innovation lies in the possibility that the underlying object/item can be attached to its property title and, thus, they can both seamlessly and trustlessly be moved together. If due to blockchain storage capacity, it becomes unfeasible to
store the underlying objects along with the NFT (or the property title for that matter), the innovation starts to crumble down, as such limitation conveys the need to store the underlying either off-chain or in separate chains. Such process will most likely prepare the road for
Read 8 tweets
21 Jun
A few conclusions from my conversation with @HugoPhilion at the Telegram Flare Proposal Group (please correct if necessary):

1. The initial 15% distribution is set in stone (I won't be further addressing this topic hereon).

2. The Spark selling pressure caused by the

Staggered distribution model is supposed to be absorbed by network stake-like incentives (FTSO rewards and F-Asset yields), though I have my doubts.

3. The Staggered distribution model was designed to last 3 years as a way to provide exchanges and wallets with

sustained incentives to remain engaged with the Flare ecosystem, maybe even pushing them to build Flare services or infrastructure, which in my opinion, is somewhat inorganic. Players should join the ecosystem because it has value added offerings, not because they are

Read 13 tweets
20 Jun
Brief 🧵 on why I think @FlareNetworks' notion of inflation falls short and fails to appropriately communicate the [negative] effects that the planned 34 month Spark "staggered distribution" will produce on the markets.

This is an attempt to open a constructive debate.

First of all, I want to make it clear that I do not feel entitled to demand anything from Flare Networks Ltd ("FNL"); they are free to do whatever they deem appropriate in order to secure the future development of the network.

It is true though, as I've mentioned before,

that FNL is not a non-profit organization, and has the clear intention to make money on the back of Flare Network's ("FN") success. FN's success is considerably dependant on network effects provided by users, which means that FNL should be paying attention to user

Read 23 tweets
14 Jun
This Crunchbase report reveals 3 increasingly relevant trends in the VC industry.

1. The amount of $ invested in startups is picking up.

2. The $ is being invested in fewer deals/Cos.

3. Acquisitions of venture-backed Cos. are skyrocketing.

Conclusion: VC firms are raising barriers to entry for new competitors and are also promoting the concentration of markets with their aggresive, profit-seeking exit strategies.
If the SEC continues to gratuitously discriminate between accredited and non-accredited investors, these trends will continue to grow, leading to increasingly concentrated markets, i.e., worse products/services, less innovation, fewer alternatives, etc.

Read 4 tweets
9 Jun
Your back down to earth reading of the news coming from El Salvador 🇸🇻:

1. Bitcoin Law makes it mandatory for merchants to accept BTC, *IF* customers offer it as means of payment.

2. No incentives are created to use Bitcoin as legal tender; most Salvadorans with access

to bitcoin will most likely be die hard HODLers.

3. The Bitcoin Law doesn't actually address how the country will use Bitcoin to promote financial inclusion. It doesn't even make it clear where the country stands in terms of digital inclusion.

4. There are no rules and/or regulations around Bitcoin infrastructure providers (exchanges, custodians, market participants, btc payment service providers, payment dispute mechanisms, derivatives, etc). The whole landscape looks like the perfect honeypot for cyber gangs.

Read 6 tweets
24 May
I'm not a huge supporter of how finance is regulated, but paradoxically, I tend to believe that we won't enjoy the full benefits of blockchain/crypto until the tech is innovatively employed by regulated entities (e.g. open finance, account portability, self-sovereign ID, etc.).
There's another angle in this paradox, which is: blockchain/crypto founders usually want to avoid all the hurdles and costs associated with regulated services (e.g. finance), which is why there's so much stuff happening in DeFi, as it's perceived as a regulation-free safe harbor.
What most blockchain/crypto founders seem to be failing to properly address, though, is that they're favouring short-term opportunities with limited growth potential over mid/long term opportunities with much juicier prospective growth rates.
Read 16 tweets
29 Mar
After reading 6 or 7 articles about this announcement, I think I finally got to weed out the unsubstantiated noise and actually understand how the USDC/USD settlement and payment process on Visa's treasury will work.

1. Crypto. com users who hold USDC and have a Visa card attached to their Crypto. com account, make USDC payments to Visa merchants.

2. USDC payments are cleared, but funds not immediately transferred by Crypto. com to Visa (i.e. settled).

3. At the end of the day, Crypto. com sends a USDC batch transfer over Ethereum to Visa's Eth address held on Anchorage, hence settling its intra-day payment obligations. Visa is, then, taking some credit risk (which will translate into costs for Visa partners and merchants).

Read 12 tweets
26 Mar
I don't know if it's possible under US law, but in case intervention is allowed for #XRPHolders in SEC v Ripple, SEC commissioner @HesterPeirce should file an amicus brief, as it'd be THE opportunity to stand for her vision and push for new regulatory policy within the SEC. Image
Imagine the impact that having an SEC commissioner opining against the SEC's own actions, would provoke on the judge.

Hester Pierce has published a variety of communications with the clear intention to show her dissension with the crypto enforcement actions launched by the SEC.
It's time for her to take the next step and follow a path that will actually make the SEC's high-level decision makers to understand her views and act accordingly. The innovation momentum will not last forever, or at least, not in the US.
Read 4 tweets
8 Mar
I'm perplexed that neither @coincenter nor @BlockchainAssn have issued a single statement on SEC v. Ripple (let alone fight the industry-harming interpretation of securities laws), despite this case CLEARLY falling within these advocacy groups' missions [attached for reference]. ImageImage
I see no single strategic reason, beyond perhaps management bias, for these blockchain/crypto [more like BTC/ETH] advocates, to not fight the SEC's harmful predilection to regulate crypto through reckless enforcement actions that destabilize the industry as a whole.
The same goes for @DigAssetMarkets.

These advocacy groups describe themselves as entities created with the sole purpose to help creating adequate regulatory frameworks for digital assets, yet they choose to relinquish the single most important opportunity to shape the landscape. Image
Read 16 tweets
5 Jan

While the entire US crypto industry (exchanges, funds, associations, PsPs, lobbyists, etc) is currently focused on fighting the AML rules proposed by FinCEN, the XRP Community has been left ALONE fighting the securities battle FOR THE BENEFIT of the whole industry.

The entire US crypto industry (excluding the XRP Community) has been miserably failing to acknowledge that, until now, all the SEC has had for purposes of characterising a blockchain-based token as a security under the Securities Act of 1933 ...

... is a 75 year-old judicial precedent (i.e. 1946 Howey Test), and some non-binding internal guidance. That's it. Nothing more. No clear federal regulations and no clear binding precedents.

Read 10 tweets
25 Dec 20
Just finished reading the SEC v. Ripple Complaint — Most of the allegations in re. XRP being a security are built around the false idea that investors bought an asset that had no 'use' beyond speculative purposes.

This is exactly where their whole case cracks up.

Ripple has to properly document and demonstrate all the 'uses' made available by the XRPL since the beginning of times. Some of them include:

- Immediate and cheap peer-to-peer transfers (everyone could be its own ODL since XRPL was first launched).

- Every XRP investor has had access to a fully functional decentralized exchange since the very beginning, being able to use XRP to trade against a variety of IOUs.

- XRP has been a very useful instrument for payments since it came into existence.

Read 12 tweets
9 Mar 20
March 9, 2020

Congressman Paul Gosar introduced the "Cryptocurrency Act of 2020" to determine which US regulator is responsible for which digital assets (DAs).

The proposal divides DAs into 3 main categories:



1) Crypto-Commodities are defined as goods or services, including derivatives, that:

a)have full or substantial fungibility.
b)the markets treat with no regard as to who produced the goods/ services; and
c)rest on a blockchain or decentralized cryptographic ledger.

2) Crypto-Currencies are defined as representations of USD or any synthetic derivatives therein, either based in algorithms, smart contracts or collateral to stabilize against USD.
Read 10 tweets