Category: Securities

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Why the SEC was right to reject nine BTC ETFs

Categories Blockchain, Cryptocurrency, Smart Contracts, Technology, Tokens, Wallet, Security Tokens, Ethereum, Securities

Why the SEC was right to reject nine BTC ETFs

When news broke that the US SEC had rejected a total of nine separate applications for Bitcoin Exchange-traded fund (ETFs), a key player in the industry feared the worst for not just the markets, but the future of the technology as well. But this may not actually be the bad news that everyone first thought it would be and this is why.

Whilst the cryptocurrency industry is pretty keen to launch exchange-traded funds (ETFs), regulatory bodies such as the SEC do not share their enthusiasm. For many, a crypto-ETF is seen as the next big milestone in the mainstream adoption of crypto and virtual assets.

Over the last few years, the US Securities and Exchange Commission has received a number of ETF proposals from companies and individuals such as the Winklevoss twins, none of which have passed its stringent sets of criteria. It seems that they are not convinced that the world of cryptocurrencies is ready for ETFs just yet.

Back in 2013, the Winklevoss twins were the first to file a Bitcoin-based ETF proposal and the agency mulled over its decision before rejecting the proposal around four years later. Then, in June, the twins filed another proposal which was swiftly rejected by the agency. Following the most recent round of rejections, the SEC has promised to review its decision but it seems unlikely that they are set to rule in favour of BTC ETFs any time soon.

The main reason for all of these rejections has been cited as the risk of market manipulation and the fact that the regulated market is not big enough to warrant such a decision. The issue of market manipulation remains as one of the biggest concerns in the crypto world. As a very small number of people own a very large amount of cryptocurrency (known as whales) this means that technically, prices can be artificially increased or decreased to suit the agenda of a few. The fact of the matter is that most creators of cryptocurrency retain large amounts of the coin, for example, Satoshi Nakamoto has 5.88% of all BTC, Ripple owns 60% of the XRP supply and the majority of ICO companies retain around 25% of all their tokens.

Couple this with the paranoia around regulation and lack of protection for investors and stakeholders and it is not hard to see why the SEC is wary.

The only way that cryptocurrencies are going to be able to enter such a regulated market is through widespread regulation on a global scale. Until this happens, Bitcoin and any other cryptocurrency can say goodbye to any kind of regulated ETF.

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Indiegogo lists its very first security token 

Categories Blockchain, Cryptocurrency, ICOs, Wallet, Security Tokens, Ethereum, Securities

Indiegogo lists its very first security token

One of the world’s leading crowdfunding sites, Indiegogo has announced it is expanding its ICO listing service to include what will be the world’s first security ICO token.

The first token of this type to be made accessible through the Indiegogo platform was created by the St Regis Aspen Resort, a super-luxury resort, located in the Rocky Mountains of Colorado. The offering which has been limited to accredited investors will allow them to purchase the Aspen Coin which represents a share of the single-asset real estate investment trust that was created to hold the $18 million of stock that is made available through the site.

“Security token offerings are the investment tool of the future, a mechanism designed to store wealth by utilizing income-producing digital assets,” said Stephane de Baets, founder and president of Elevated Returns, the asset management firm that owns the resort. “By allowing access to investing in traditional assets like real estate, we are creating a new opportunity for investors to explore an ownership stake in something previously only accessible to private investors and high net worth individuals. Indiegogo is a well known and trusted name in alternative funding and cryptocurrency, making them an incredible partner for us to leverage their influence, experience and global audience.”

Investors that meet the qualifying criteria are able to contribute to the ICO via means of USD, BTC or ETH. The Aspen Token is based on the ERC-20 platform, meaning they can be held in any Ethereum wallet in the world, but due to securities regulations in the US, they can only be traded on an SEC-approved trading system. In this case, that would be Templum Markets LLC, the broker who is overseeing the ICO with Indiegogo.

Co-founder of Indiegogo, Slava Rubin said:

“We have always strived to foster innovation and provide our users access to some of the most novel and interesting products and ideas from around the world. With the blockchain revolution fully underway, we are excited about the world-changing impact and potential of security tokens. Our goal is to provide an access point to our growing network of millions of customers and the opportunity to own a fragmented interest in the St. Regis Aspen Resort.”

The Indiegogo platform was originally launched back in December 2017 with the first project listing of Fan-Controlled Football League reaching its $5 million target in a very short time. But, despite lots of interest from companies wanting to list ICOs on the platform, Indiegogo declined to list any during the first two quarters of 2018.

 

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SEC rejects 9 BTC – ETF applications

Categories Blockchain, Cryptocurrency, ICOs, Technology, Securities, DLT

SEC rejects 9 BTC – ETF applications

Bitcoin has been taken a hit, ever since the SEC refused applications for a total of nine different Bitcoin exchange-traded fund (ETFs).

The applications to list and trade Bitcoin ETFs were made by Proshares, Direxion and GraniteShares and were all refused by the US regulatory agency.

The decision deadlines for Proshares was August 23rd whilst GraniteShares were due to get an answer on September 15th. The industry waited with baited breath to see what decision the SEC would come to, and many expected a drastic rise in BTC value if the outcome was favourable.

In each report published by the SEC, the agency stated the following:

“The Commission is disapproving this proposed rule change because, as discussed below, the Exchange has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular, the requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”

The SEC also added that none of the applications provided enough evidence that the BTC futures market was of a big enough size to warrant an approval.

The SEC did state however that their disapproval doesn’t rest on whether Bitcoin or blockchain technology has potential or value as an investment or innovation, meaning that there could be hope for future applications.

The latest rejections from the SEC are nothing new for Bitcoin as in 2017, they rejected a similar application from Cameron and Tyler Winklevoss and in July they rejected a further amendment made by the two brothers.

The agency stated that their reason for rejection related to issues around investor protection because, at the time, bitcoin was subject to fraud and manipulation carried out from offshore and unregulated markets.

Now all industry eyes are on the SEC as they wait for the outcome of the CBOE Bitcoin ETF proposal although many believe that they will hold off until 2019. In the meantime, CBOE has been active in working hard with the SEC to mitigate their concerns.

 

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Lithuania announces guidelines for cases when ICOs qualify as securities

Categories Blockchain, Cryptocurrency, Regulatory, ICOs, Tokens, Securities

Lithuania announces guidelines for cases when ICOs qualify as securities

The Lithuanian Ministry of Finance has announced the issuance of guidelines regarding initial coin offerings (ICOs) as well as outlining when cryptographic tokens could be considered as securities and how each token sale can be regulated by various laws within the country.

In a document published on Friday, a definition was outlined that would “grant profits or governance rights” to any investor that obtains the tokens via means of ICOs.

Whilst the existing civil code, in theory, should apply to all of the projects with tokens that can be used as a payment tool, a variety of financial regulations should apply if a token grants profits or governance rights.

Guidance on tokens

The ministry of finance drills down further into ICOs and provides guidance on tokens that are issued, the entity that organises the sale, and whether it participates in a secondary market exchange. It will also consider whether the ICO is a crowdfunding activity.

The framework states that these aspects should be regulated by laws that are already in place in Lithuania, such as those that govern crowdfunding, securities, and financial instruments markets. Whilst the ministry has said that the framework is not a formal bit of legislation, it does aim to use it to bring transparency to the industry so that ICOs can grow in a more regulated environment.

“ICO market has not been regulated yet. It has huge potential but there are risks that we must manage. We should make our efforts for Lithuania to become the main headquarters for those ICO project promoters who are willing to operate in a transparent and orderly legal environment”, Vilius Šapoka, Minister of Finance said in a statement.

In addition to these financial regulations, the announced guidelines will also offer forth thoughts from the country’s taxation, auditing and financial crime investigation agencies in terms of how tax and (AML) Anti Money Laundering rules should be applied. For example, the guidelines put forward a suggestion that investors’ income that is received from an individual purchase and sales of cryptocurrencies should be taxed at the standard 15% income tax rate.

 

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