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Regulators and investors 'are just waking up' to cryptocurrency
https://www.cnbc.com/2018/01/26/blockchain-experts-tips-for-understanding-cryptocurrency.html
Regulators and investors 'are just waking up' to cryptocurrency, and Davos blockchain co-chair has some advice
Regulators and investors alike are just beginning to understand what cryptocurrency is, says Jamie Smith, president of the Global Blockchain Business Council. The organization helps regulators understand blockchain technology and other cryptocurrencies.
"What concerns me is that there are so many regulators, not just in the United States, but all over the world, who are just waking up to what this is," Smith told CNBC during "Power Lunch" on Friday.
Despite the buzz around digital currency, people have little understanding of it, Smith said. "It's just really critical that they learn and that they take the time [to understand]."
Fears over an uncertain regulatory environment around the digital coin market may have sparked a sell-off earlier this month, with bitcointumbling more than 30 percent. South Korea and China already have imposed or have said they will impose regulations on digital currency.
Smith, who was in Davos this week to co-chair the first-ever Future Council on Blockchain at the World Economic Forum, said she is "a big believer in smart regulation."
"But you can't have smart regulation until you're smart," she said. Here are some of her tips on cryptocurrency.
1. Don't invest in an ICO that doesn't have a product.
Smith said she supports the U.S. Securities and Exchange Commission's statements that if a company decides to make an initial coin offering, or ICO, a way to raise funds for cryptocurrency ventures, they should first have an actual product.
2. Get some guidance on cryptocurrency options.
"It would be very helpful to have a little guidance on all of these cryptocurrencies," Smith said. "Everybody's heard about bitcoin. But there's a lot of different cryptocurrencies out there." Without knowledge of the many ways to invest in digital money, Smith said, investors are at the mercy of companies that use their own criteria for selecting which digital currency to invest in.
3. Know the difference between pseudo-anonymous and fully anonymous.
"Bitcoin is pseudo-anonymous," Smith said. "Pseudo-anonymous just means [other users] don't know exactly your name attached to the IP address, but law enforcement could essentially figure it out if they needed to."
4. Use resources such as the Blockchain Alliance.
The organization helps law enforcement and regulatory agencies all over the world understand the blockchain ecosystem, Smith said. The organization's website also says it provides informational sessions and technical assistance for investors to understand digital currencies.
"There's a lot of really cool work going on educating law enforcement on this," Smith said. "The problem is there aren't even that many people in law enforcement who know about it or have the funding to spend time on it."
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ICOs Are the Next Stage in the Evolution of Startup Funding
I think we're going to see many more articles and discussions along these lines.
Opinion
ICOs Are the Next Stage in the Evolution of Startup Funding
An Initial Coin Offering (ICO) is an innovative crowdfunding model allowing startups to bypass traditional early seed investment and other technical obstacles
An Initial Coin Offering, frequently referred to as an ICO, is an innovative crowdfunding model, first pioneered by Ethereum in 2014, in which new projects offer to sell investors units of their underlying crypto tokens – representing a new technology or application – in exchange for existing cryptocurrencies like Bitcoin or Ethereum.
The crypto tokens themselves do not offer the holders any actual equity or particular rights in the project that they have invested in , unlike in Initial Public Offerings, or IPOs. In some cases, the crypto tokens are “equity tokens,” so-called because their only purpose is to appreciate in value, in which case they may be classified as financial securities. Such tokens are subject in various jurisdictions to strict regulations as “securities.” In other cases, the crypto tokens are solely “utility tokens,” providing the owner with access to a specific product or service, and are therefore less likely to be classified as financial securities.
In order to better understand the impact of ICOs, and why they are so successful – a blockchain-based data storage network called Filecoin raised over $253 million during its token offering in September 2017, making it the largest token sale ever – as well as the innovation they bring to international business and global economy, we should focus on the process in which capital has been raised for technology initiatives, especially young startups.
Unlike the traditional raising of capital on a stock exchange, ICOs are not limited to a local market and are generally open to the entire world. However, it is essential that a company have a White Paper and a roadmap prepared prior the launch of an ICO and a functioning platform for the token to be used. The White Paper details everything potential investors must know concerning the new crypto token. This includes technological, commercial and financial information about the crypto token in language understandable to laymen. The roadmap specifies the company’s clearly defined, achievable and realistic objectives and their timeframes. In the current environment, it is important that ICO makers work closely with respected legal counsel as to the application of existing securities laws to the ICO. Whilst there are those who consider that there is no direct regulation of ICOs, this is not the case. Each jurisdiction has its own securities laws which must be carefully considered and complied with.
One of the reasons that ICOs concern regulators in various countries around the world is that, practically, they represent a regulatory workaround. Therefore, several regulators have taken an aggressive position in warning and protecting prospective investors from the accompanying risks. Some countries, such as China and South Korea, have even banned ICOs. Some of the risks the regulators mention include the high volatility of crypto tokens – and cryptocurrencies in general, the lack of regulation for most ICOs and their being based overseas, and the possibility for fraud, as some issuers might not intend to use the funds in accordance with the manner prescribed by the company as marketed. Hence, there is no doubt that sooner or later, ICOs will be regulated. The Israel Tax Authority published last week a draft circular for public comment concerning the taxation of specific aspects of ICOs.The ICOs market has matured significantly in 2017. Several ICO scams exposed last year led to growing skepticism on the part of investors. As a result of that skepticism, ICO projects had to legitimize themselves and began hiring bankers, experienced lawyers, and other professionals. And finally, the statistics speak for themselves; the total amount of funds raised via ICOs has skyrocketed above $4 billion for the first time, and the number of ICOs has grown to several hundred globally.
In the coming year, we expect the crypto market to remain active and continue to grow (though, adoption of new regulations may have a major effect), as well as institutional money beginning to flow into cryptocurrency and ICO markets at a much faster pace. We also expect to see an increasing number of startups from more diverse industries attempting to raise money through ICOs.
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Want to make sure others from the ECO get a chance to weigh in #j...@...com #c...@...com
SEC, CFTC Chiefs Eye Closer Crypto Scrutiny
This is going to make CfPA's role more important as blockchain continues to converge with crwodfundingcrowdfunding.
see: https://www.coindesk.com/sec-cftc-chiefs-eye-closer-scrutiny-of-us-cryptocurrency-industry/
SEC, CFTC Chiefs Eye Closer Crypto Scrutiny
Two U.S. financial regulators are increasing their agencies' commitment to bringing closer scrutiny to the country's cryptocurrency industry.
In a Wall Street Journal op-ed published yesterday, both the Securities and Exchange Commission (SEC) ands the Commodity and Futures Trading Commission (CFTC) voiced that they are devoting a significant portion of resources to monitoring the industry. And along with other authorities, they will continue to stamp down on fraudulent activities in the market.
The article was co-written by Jay Clayton and J. Christopher Giancarlo – chairs of the SEC and CFTC, respectively – and is the latest public statement from the financial regulators indicating the increasingly strident efforts being made to oversee the industry.
In July last year, the SEC issued the notable announcement that the agency may consider tokens issued during initial coin offerings (ICO) as securities that must be registered with the agency.
Yet, in the WSJ piece, Clayton and Giancarlo warned those who might try and circumvent the guidance, saying:
"The SEC is devoting a significant portion of its resources to the ICO market ... Market participants, including lawyers, trading venues and financial services firms, should be aware that we are disturbed by many examples of form being elevated over substance, with form-based arguments depriving investors of mandatory protections."
Further, cryptocurrencies are now being "promoted, pursued and traded as investment assets," while their much-touted utility as an efficient medium of exchange now a "distant secondary characteristic," they added.
The comments are also in line with recent moves by the SEC in halting ICO activities and filingcharges against their organizers. Just last week, the CFTC, which treats cryptocurrencies as commodities, has also notably brought up legal cases to sue allegedly fraudulent cryptocurrency investment schemes.
In addition, Clayton and Giancarlo also voiced support in the article for policies that seek to review existing laws to ensure they can efficiently regulate activities pertaining to cryptocurrency.
"Many of the internet-based cryptocurrency-trading platforms have registered as payment services and are not subject to direct oversight by the SEC or the CFTC. We would support policy efforts to revisit these frameworks and ensure they are effective and efficient for the digital era," the regulators concluded.
THE STATE OF CROWDFINANCE: #FUNDRAISING #BLOCKCHAIN #SECURITIES #ICOS (#NewYork)
A CfPA event hosted/sponsored by Fordham Gabelli School of Business and made possible through the support of CfPA title sponsor Computershare.
Fordham Gabelli School of Business | McNally Ampitheatre – 140 W. 62nd Street, New York 10023
THE STATE OF CROWDFINANCE: FUNDRAISING – BLOCKCHAIN – SECURITIES – ICOS
THE STATE OF CROWDFINANCE
This event is aimed at providing local CfPA members, small business owners, entrepreneurs and students an opportunity learn more about:
- Crowdfunding
- Making your initial capital raise
- Blockchain, cryptocurrency, ICOs and tokens
- Regulation A+
Sponsored by Fordham University’s Gabelli School of Business, this FREE cable news-style panel event will give attendees the opportunity ask questions and offer their perspective on the topics at hand.
Agenda:
5:30 – 6 p.m. Registration and Networking
6:00 – 7:15 p.m. Program
7:15 – 8:30 p.m. Networking Reception
Speakers:
- Andrew Corn, Chief Executive Officer, E5A Integrated Marketing
- Jordan Fishfeld, Managing Director, CFX Markets
- Sudip Gupta, Visiting Professor, Fordham Gabelli School of Business
Save the date:
Thursday, November 16, 2017
5:30 p.m. ET
Location:
Fordham University McNally Amphitheater
140 W 62nd Street, New York, NY 10023
Cost: Free!
Register here: https://landing.computershare.com/CfPAMeetUp
Irwin Stein, veteran #securities lawyer, on #crowdfunding future
Want to hear Irwin Stein, veteran securities lawyer, answers questions posed by Darren Marble such as:
Q: What is it about the Crowdfunding industry that has you concerned?
Q: What are you seeing happening in the market? What is happening in the industry that is a red flag?
Q: Are portals adequately diligencing companies doing Reg CF campaigns or not?
Q: Should there by some minimum standard that portals should have when deciding or evaluating whether or not to list and issuer?
Q: Let's look ahead 12 months. What do you predict is going to happen in the next year?
Q: And many more!
See: https://www.youtube.com/watch?v=rU5sAve1mBE
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This Crowdfunding ECO "Town Hall" is an open forum for any and all registrants of CfPA's Crowdfunding Ecosystem (ECO) to raise and discuss topics of interest as it relates to
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Ecosystem Community Coordinator, CfPA
