FCA Releases Guidelines on Token Taxonomy, Includes Plan to Regulate Cryptocurrency

The Financial Conduct Authority on Wednesday released guidelines for the Finance Ministry in the UK on how to regulate cryptocurrencies. Reportedly, the Ministry welcomed the guidance and was planning to consult on ‘unregulated cryptocurrencies’ later this year.
This was a monumental event in the UK’s Financial System as they attempted at a classification of different types of cryptocurrencies – ‘Token Taxonomy.’ The Authorities broadly viewed three kinds of crypto-assets: cryptocurrencies as a medium of Exchange, utility tokens and security tokens.
 
Stablecoins and Security Tokens to Be Formalized Soon?
They recognized ‘stablecoins’ backed by FIAT, as crypto which could be regulated as e-money. The guidelines added,
Respondents agreed that certain types of tokens can meet the definition of e-money and so fall under the EMRs
Nevertheless, these are some types of stablecoins like ones backed by a commodity or a basket of currencies and commodities. While Facebook’s Libra wasn’t mentioned explicitly, it was indicated that depending on the assets and the ecosystem that Libra builds it could be regulated as a security, a debt instrument, or other types of specified investments.
‘Security tokens‘ issued on the blockchain were to broadly accepted to be regulated under RAO (Regulated Activities Order).
Unregulated Exchange and Utility Tokens
The FCA broadly accepted that cryptocurrencies that are not issued or controlled by a central authority would be classified under ‘unregulated cryptocurrencies’ as they do not fall under the purview of existing laws. These include Exchange currencies like Bitcoin and even utility tokens like Ethereum.
Last but not least, ‘utility tokens’ were defined as cryptocurrencies “that do not grant holders rights that are the same as those granted by specified investments.” While some them might be classified as e-money, the FCA largely agreed on putting utility tokens in the unregulated section.
Moreover, the FCA also raised concerns around the dubious activities conducted on  Exchange or trade platforms. The FCA told the media,
“A combination of market immaturity, volatility, and a lack of credible information or oversight raises concerns about market integrity, manipulation and insider dealing within crypto-asset markets,”
Regulatory Watchdogs all across the world are starting to consider cryptocurrencies as a serious issue. While the current market capitalization is considerably low, the retail business is quickly adopting this technology.
Furthermore, even US lawmakers noted in the Senate Hearing held the day before that, US Cannot Ban Crypto Even If They Decide To. The finalized laws and guidelines on them can be expected from both Governments within the next year.
Do you agree with the classifications drawn by the FCA? Please share your views with us. 
The post FCA Releases Guidelines on Token Taxonomy, Includes Plan to Regulate Cryptocurrency appeared first on Coingape.
Source: CoinGape

Why IEOs Might Drive New Investors to the Crypto Market

Coinspeaker
Why IEOs Might Drive New Investors to the Crypto Market
In this article, we will be exploring the main reasons why IEOs may, in fact, drive a flock of new investors into the crypto market.
Why IEOs Might Drive New Investors to the Crypto Market

Continue reading at Coinspeaker
Source: CoinSpeaker

The SEC-Registered Long-Term Stock Exchange: Another Try to Encourage Crypto Investments

Coinspeaker
The SEC-Registered Long-Term Stock Exchange: Another Try to Encourage Crypto Investments
SEC-approved Long-Term Stock Exchange set to enable companies raise funds using traditional means and empower investors committed to long-term success.
The SEC-Registered Long-Term Stock Exchange: Another Try to Encourage Crypto Investments

Continue reading at Coinspeaker
Source: CoinSpeaker

London Stock Exchange Testing Issuance and Trading of Securities on the Blockchain: Report

Out of many application of Blockchain that has come to light, one of the most promising application is data security and implementation of a distributed consensus to ensure transparency. Therefore, it finds its use significantly in the execution and settlement of financial securities like equities, bonds and commodity stocks on Stock and Commodities Exchanges.
An automated distributed system would deter all kinds of corruption and malpractices. It would also enable investments in a broader range of financial instruments which were earlier limited by the centralized agencies issuing the security like Government bonds.
Also Read: The London Stock Exchange Conducts It’s First Security Token Offering (STO) on the Blockchain
Reportedly, the London Stock Exchange is testing the issuance, admission, and trading of equities with Nivaura. Nivaura is London-based Fintech start-up that develops products for issuance and settlement of securities on Financial platforms. Nikhil Rathi, the CEO of London Stock Exchange (LSE) told CNBC,
“You can certainly see distributed ledger technology having an application in the issuance process,” He added “I can see that technology being used in settlement too.”
The LSE is reportedly working very closely on delivering financial securities on the blockchain. These are classified as Security Token Offerings (STO) because their price and supply are backed by actual financial security.
Furthermore, other significant developments in traditional Exchange through the implementation of Blockchain and cryptocurrency has been witnessed at Switzerland-based SIX Exchange.
SIX Exchange has worked closely with Germany-based Amun AG in releasing Exchange-traded products based on Bitcoin and other cryptocurrencies. Reportedly, SIX is also looking to launch a new Exchange based on a Blockchain platform to accelerate the entire process.
Also Read: Swiss Six Exchange Lists XRP Backed Exchange Traded Product
On adding cryptocurrencies and Bitcoin as security itself on the Exchange, Rathi mentioned citied that “extreme manifestations” in the crypto space were cause for “a little bit of caution.”
Blockchain and AI together are disrupting the FinTech industry now that it’s seeping to Stock Exchanges as well. Which other countries will support the transformation? 
The post London Stock Exchange Testing Issuance and Trading of Securities on the Blockchain: Report appeared first on Coingape.
Source: CoinGape

The London Stock Exchange Conducts World’s First Security Token Offering (STO) on the Blockchain

The London Stock Exchange has granted permission to issue its first Security Token Offering (STO) or Equity-Token Offering (ETO). 20|30 is the limited private firm that has been accepted into the Financial Conduct Authority (FCA) Sandox 4 and will conduct the STO.
Beginning of An Era of Blockchain Tokens
The tokens will be recorded on the blockchain and would be administered decentrally. The test phase of the offering has already been conducted with the parent firm, 20|30 which will provide the platform for tokenizing all securities. Blockchain tokens will increase the efficiency and efficacy of exchanges and trades conducted in the LSE. It will also increase the transparency of trades and increase investor confidence.
The firm has already acquired an initial SEED funding amount of 1 million Euros and has begun the test phase of issuing tokenized equities. The tokens are issued on Ethereum based smart contracts. The new efficient system of offering securities will reduce trading fees on the futures market by 85%.
The Telegraph in the UK reported that:
Around £3m worth of shares in 20|30 were issued in token form and settled in a test environment on the LSE’s Turquoise equity trading service.
Equity in a financial company will be sold through TokenFactory, a product of 20|30. Moreover, the shares will be subjected to a one year lock-in period. Furthermore, only institutional investors like banks, brokers and specialist trading firms will be allowed to participate in the private offering initially.
While 20|30 is a startup, it has worked closely with Nivaura, a Blockchain based start-up focusing on capital markets. Nivaura has attained an investment of 20 million euros from the London Stock Exchange and law firm Allen & Overy and Linklaters.
20|30 CEO, Tomer Sofinzon said:
“Tokenisation will unlock value in a whole range of assets, from existing shares to new issuance, bonds, property, IP, fine art and much more.”
The cryptocurrency community is also excited about the tokenized sale in one of the oldest and largest Stock Exchanges of the world. While the tokenized security is only available for institutional investors now, it will be soon be made available to retail investors opening a whole new secure portal for asset exchange.
Has the must anticipated era of the tokenized economy has begun? Will it favor the crypto markets or lead to further centralization? Please share your views with us. 
The post The London Stock Exchange Conducts World’s First Security Token Offering (STO) on the Blockchain appeared first on Coingape.
Source: CoinGape

Blockstack Set to Raise $50M Via World’s First SEC-Approved Crypto Token Sale

Coinspeaker
Blockstack Set to Raise $50M Via World’s First SEC-Approved Crypto Token Sale
Blockstack is likely to set a new precedence in the ICO Industry to be the first company to conduct its token sale under the SEC Regulation A+ framework.
Blockstack Set to Raise $50M Via World’s First SEC-Approved Crypto Token Sale

Continue reading at Coinspeaker
Source: CoinSpeaker

Asset Providers Can Now Issue Security Tokens on Tron Blockchain

Coinspeaker
Asset Providers Can Now Issue Security Tokens on Tron Blockchain
The partnership between Tron and Swarm will offer asset providers a possibility to issue security tokens on the Tron network.
Asset Providers Can Now Issue Security Tokens on Tron Blockchain

Continue reading at Coinspeaker
Source: CoinSpeaker

UAE is the Next Blockchain-Crypto Superpower

Coinspeaker
UAE is the Next Blockchain-Crypto Superpower
According to Gregory S Mathew, blockchain expert and professional tech researcher, the United Arab Emirates are the next superpower not only in the global economy, but in blockchain and crypto spheres as well.
UAE is the Next Blockchain-Crypto Superpower

Continue reading at Coinspeaker
Source: CoinSpeaker

SEC Takes a Historic Step as it Clears its Stance on Token Offering

2018 was all buzz about US SEC and its considerations of blockchain and cryptocurrencies, but nothing actually materialized nor there was any clarity on what the regulator looking at. But finally, the air has been cleared as SEC has released a Statement on “Framework for ‘Investment Contract’ Analysis of Digital Assets”
SEC explains how Howey test should apply to digital assets
Finally, the US regulator for securities and exchanges, the SEC, has issued its first ever letter that provides an insight to companies that are considering token offering for raising capital or thinking of an ICO.
The first of its kind “No-Action Letter,” was received by the company called TurnKey Jets(TKJ), which is a startup that offers an all-inclusive private jet service including the plane crew, and pilot. Interestingly, the company’s website has no mention of a crypto-token, which appears to play a role in the actual reservation of the services. The no-action letter includes six key points as specifically relates to TurnKey Jets giving the world the points which is considered to reach this decision. To quote from the letter

TKJ will not use any funds from Token sales to develop the TKJ Platform, Network, or App, and each of these will be fully developed and operational at the time any Tokens are sold;
The Tokens will be immediately usable for their intended functionality (purchasing air charter services) at the time they are sold;
TKJ will restrict transfers of Tokens to TKJ Wallets only, and not to wallets external to the Platform;
TKJ will sell Tokens at a price of one USD per Token throughout the life of the Program, and each Token will represent a TKJ obligation to supply air charter services at a value of one USD per Token;
If TKJ offers to repurchase Tokens, it will only do so at a discount to the face value of the Tokens (one USD per Token) that the holder seeks to resell to TKJ unless a court within the United States orders TKJ to liquidate the Tokens; and
The Token is marketed in a manner that emphasizes the functionality of the Token, and not the potential for the increase in the market value of the Token.

Along with the no-action letter, SEC has also released a document called “Framework for “Investment Contract” Analysis of Digital Assets,” where it lays out a detailed explanation of how the existing Howey Test used to determine what is security is being applied to digital assets issued on a blockchain. The vast majority of the document details how the SEC views what is considered a reasonable expectation that profits will be derived from the efforts of others, a crucial factor of the test.
Also Read: Over 40 Central Banks Are Considering Blockchain Currencies: Davos Report
The most interesting section begins on page nine, with 12 characteristics that if present, mean the token offering is less likely to pass the Howey test. The first two are crucial.
“The distributed ledger network and digital asset are fully developed and operational,” and  “holders of the digital asset are immediately able to use it for its intended functionality on the network, particularly where there are built-in incentives to encourage such use.”
While there are still some gaps to be filled, the efforts of the SEC were well appreciated by the community. According to Jake Chervinsky, the lawyer who has been keeping an eye on legal and regulatory movement around cryptocurrencies tweeted saying
“The SEC published its DLT Framework today, giving us an in-depth look into how they think the Howey test should apply to digital assets. It isn’t perfect, but it is a *huge* upgrade from the DAO Report. I’ll throw some shade at the SEC later today, but for now, I give them 👍👍.”
The community has given its thumbs up to SEC which has finally broken its silence. There is a sense of optimism already that SEC may now move a bit quicker with decision-related to cryptocurrencies.
What is your view on SEC’s Framework for “Investment Contract” Analysis of Digital Assets? Do let us know your views on the same.
The post SEC Takes a Historic Step as it Clears its Stance on Token Offering appeared first on Coingape.
Source: CoinGape

Hong Kong Releases New Guidance on STOs

Coinspeaker
Hong Kong Releases New Guidance on STOs
Hong Kong’s Securities and Futures Commission (SFC) has published detailed guidelines for security token offerings (STOs).
Hong Kong Releases New Guidance on STOs

Continue reading at Coinspeaker
Source: CoinSpeaker

DX.Exchange Captures Institutional Investors With its New STO Platform

DX.Exchange was on rich bulletins this year with the launch of stocks and ETF trading. It is a crypto platform from Estonia and has today announced the launch of its own security token.
Secondary Trading of Security Tokens
Per the announcement, the exchange is allowing the secondary trading of security tokens via its platform, means that the companies can list their security tokens on DX.Exchange which had previously issued on other platforms.
Moreover, the platform is launching its own native security token called IGWT token since it is on-boarding the security token trading for institutional investors. Consequently, such professional and institutional investors can buy security tokens on the exchange for fiat, Bitcoin (BTC), Ethereum (ETH), Tether (USDT) and XRP. Moreover, in the near future, the firm will introduce its own technology for asset tokenization.
“Now, blockchain and crypto entrepreneurs are looking at raising funds via Security Token Offerings (STOs). STOs are swiftly replacing ICOs. The noticeable shift is largely driven by softening demand from retail investors for ICOs, due to lack of investor confidence.”
As confirmed at the Token2049 conference (held on March 13 and 14 in Hong Kong), the listing of security token will begin this week –Such security token listing and trading would be the first of its kind in cryptocurrency exchange platforms. However, the service would be specifically for professional and verified institutional investors but remained unavailable for retail investors.
DX.Exchange Launches Security Token
So-Called IGWT native token is an acronym for ‘In God We Trust’ which will enable firms to raise money. Initially, 18 million IGWT tokens will be released and sold privately, holding 10 percent as the company’s profit which will be distributed to the token holders regularly.
The firm will most likely launch the platform in April this year but at the moment it is operating its services with approximately 8000 pre-registered users. DX.Exchange is partnered with MPS Marketplace Securities Ltd registered in Cyprus. As per the announcement, US STOs will be tokenized vie Ethereum blockchain and ERC-20 backed Real-world stocks which are bought and held by DX.Exchange’s brokerage MPS MarketPlace Securities Ltd.
Moreover, the platform isn’t planning to offer its services to the U.S service due to the country’s regulatory issues. DE.Exchange’s co-founder Daniel Skowronski further notes that;
“Our vision is to bridge the gap between the old world and the new digital world. We believe that all assets whether its securities, art or real-estate will be tokenized. This tokenization has many benefits but the strongest is the ability to help create wealth for people all over the world no matter their social economic situation.”
The post DX.Exchange Captures Institutional Investors With its New STO Platform appeared first on Coingape.
Source: CoinGape

PwC’s Strategy& Report: A Whooping $20B was Collected via Over 1132 ICOs and STOs in 2018

CoinSpeaker
PwC’s Strategy& Report: A Whooping $20B was Collected via Over 1132 ICOs and STOs in 2018
Experts of PwC’s Strategy& and Swiss-based CVA have explained why there is no fundamental difference between ICOs and STOs.
PwC’s Strategy& Report: A Whooping $20B was Collected via Over 1132 ICOs and STOs in 2018

Continue reading at Coinspeaker
Source: CoinSpeaker

Alluva Set to Increase Transparency in the Crypto Ecosystem via Its New Blockchain-Based Product

CoinSpeaker
Alluva Set to Increase Transparency in the Crypto Ecosystem via Its New Blockchain-Based Product
Alluva launches its blockchain based, cryptoasset prediction product that incentivizes users to increase transparency in the ecosystem.
Alluva Set to Increase Transparency in the Crypto Ecosystem via Its New Blockchain-Based Product

Continue reading at Coinspeaker
Source: CoinSpeaker

U.S. SEC Chairperson Jay Clayton Clarifies that Ethereum is Not a Security

CoinSpeaker
U.S. SEC Chairperson Jay Clayton Clarifies that Ethereum is Not a Security
In his answer letter, Jay Clayton opens up on defining ICO tokens as securities saying that there cannot be a static approach to deal with different crypto assets. Meanwhile, according to the agency’s laws, Ethereum is not the case.
U.S. SEC Chairperson Jay Clayton Clarifies that Ethereum is Not a Security

Continue reading at Coinspeaker
Source: CoinSpeaker

‘Ethereum is Not a Security’, Said the Pied Piper of Hamelin

SEC Chairman, Jay Clayton had sent an official letter to the United States Representative, Ted Budd regarding the ‘application of federal securities to digital assets.’ The uncertainty over cryptocurrencies being classified as investment security has kept the minds at SEC occupied from a long time.
For SEC, Investor’s Security Comes First
Meanwhile, Clayton noted that the SEC has successfully curbed down on the illegal and immoral ICOs that was prevalent during 2016-2017.
The Divisions of Corporation Finance, Investment Management, and Trading and Markets had issued a statement in November 2018
The Commission has brought a number of actions involving offerings of digital asset securities. To date, these actions have principally focused on two important questions.
First, when is a digital asset a “security” for purposes of the federal securities laws? Second, if a digital asset is a security, what Commission registration requirements apply.
Jay Clayton reaffirmed in the letter that thorough analysis of a digital currency or asset will be made by the Departments at the SEC.
—regardless of the terminology used to identify the digital asset—will depend on the facts and circumstances, including the economic realities of the transaction.
Conditions To Not Being Classified As a Security
The necessary and sufficient condition for any digital asset to ‘not’ be classified as ‘security’ is its autonomy and decentralization. The hopes of the token holder must reside with the efforts of the entire community and not with a particular set of people.
Clayton mentioned that digital currency’s definition as a particular asset class could change with time. Therefore, a cryptocurrency released as ‘security’ can later be exempted from the Securities Exchange Act after it achieves autonomy.
In the letter he said,
I agree with Director Hinman’s explanation of how a digital asset transaction may no longer represent an investment contract if, for example, purchasers would no longer reasonably expect a person or group to carry out the essential managerial or entrepreneurial efforts. Under those circumstances, the digital asset may not represent an investment contract under the Howey framework.
Hence, when the conditions are applied on Ethereum, the following can be proposed:
Ethereum has achieved a high level of decentralization through a fair and open distribution of Ether (ETH) tokens. However, the hopes of the Ether (ETH) holder currently reside with the Ethereum Foundation’s successful implementation of the Serenity Update. The expectations of the token holders rest with Vitalik Buterin and the Ethereum Foundation. Therefore, Ethereum might still be classified under ‘security.’
The cryptocurrency media publications have announced that ‘Ethereum is not a security.‘ However, a clarification came from the Executive Director of CoinCenter who clarified that the headline was not appropriate. The publication has confirmed on changing their title.

Some folks interpreted the headline on my post earlier today to mean Clayton said explicitly that ether is not a security. Not what we meant and have changed headline accordingly. He agrees with Hinman’s method of applying Howey (which concluded ether today is not a security).
— Jerry Brito (@jerrybrito) March 12, 2019

The post ‘Ethereum is Not a Security’, Said the Pied Piper of Hamelin appeared first on Coingape.
Source: CoinGape