On Thursday, the crypto markets lost over $27B in market valuation and the downtrend continues, even after a two-month period of stability. The selloff of Bitcoin Cash may have triggered the market decline, but analysts have also speculated that the market was weakening leading up to the selloff (Forbes, CoinTelegraph)
Additionally, rumors of impending SEC civil penalties and enforcement actions began to swirl as the crash continued, and a day later the first two civil penalties were, in fact, issued against ICOs solely due to their failure to register the token sales with the regulators. 🔥🔥🔥See the official SEC statement on these and other enforcement actions here (CCN, Cointelegraph, SEC.gov)
How long will the market rebound take? Fundstrat analyst Rob Sluymer predicts that it will “take weeks, if not months” to repair the bear markets, but that the markets are merely stressed, not broken (CoinTelegraph)
SEC director William Hinman said the “plain English” guidelines on initial coin offerings are forthcoming, with hopes that the guidance will allow for potential issuers to determine whether or not they may be planning a security offering and what regulatory measures might need to be taken (Coindesk)
A college student owes $400K in taxes to the United States Government after making an initial $5000 investment into Ethereum when the market price was merely $50. After the cryptocurrency value spiked, the student engaged in crypto to crypto trades but never cashed out into USD, however, these are still considered taxable events and therefore the 1099-K created for the student by Coinbase was filed with the IRS in early 2018. Don’t worry, he has a tax attorney on the case (CCN)
Crypto wallet service provider Blockchain plans to airdrop $125M in Stellar (XLM), with the first batch of coins going out within the next week. This is the first coin to participate in Blockchain’s airdrop programwhich gives crypto projects access to the 29M users of the Blockchain wallet (Coindesk)
Giant South Korean cryptocurrency exchange Bithumb announced plans to launch a security token exchange alongside US-based crowdfunding platform SeriesOne. The exchange will reportedly be established in the first half of 2019, and the announcement comes shortly after Bithumb announced plans for development of a global decentralized crypto exchange (Coin Telegraph)
Yesterday, Coinbase announced plans to feature the Basic Attention Token (BAT) on Coinbase Pro, with trading being accessible for most users (besides those based in New York). The token is exchanged between publishers, advertisers and users and is an open-source advertising exchange platform based on the Ethereum blockchain which aims to improve digital advertising (Coinbase Blog, basicattentiontoken.org)
The Coinbase announcement comes amidst the company’s push to include 200-300 new tokens on the exchange within the next year. Coinbase COO Asiff Hirji continues to deny claims of an imminent IPO, although the company plans to go public “at some point” (Coin Telegraph)
Morgan Stanley’s research division is claiming that crypto is now an institutional asset class, basing their thesis on the growing involvement of several established financial institutions. The researchers also identified a growing trend of Bitcoin and USDT trading as more than half of current Bitcoin trading is against another digital asset (Coindesk)
Financial company Mastercard is seeking approval for a patent for fractional reserve management of blockchain assets, although it seems counter to the mission of cryptocurrency and the cryptosphere’s aversion to debt-backed currency (CCN)
The Shenzen Court of International Arbitration has recognized Bitcoin as property, allowing for merchants in China to legally accept crypto as payment (CCN)
Sony has developed a crypto hardware wallet for storage of cryptocurrencies in offline environments while still having access to online crypto storage via their private key, a contactless IC card and the use of an NFC-enabled mobile device (CCN)
As announced this week, cryptocurrency fund Galaxy Digital Ventures (founded by former Goldman partner Mike Novogratz) and Goldman Sachs invested $15M into digital asset custodian BitGo during their Series B round, taking another step forward in their foray into the world of cryptocurrency (CCN)
The tokens sold during tZero’s Security Token Offering earlier this year were issued this week, after investors who participated in the $134M round of fundraising saw their signed agreements for future equity convert to tokens last Friday. Although the tokens have been created and issued, holders cannot access them until January 10th as they must be held in a custodial wallet for 90 days (Bitcoinist)
When news hit about the above-mentioned issuance, the Polymath security token surged over 20% as investor excitement was renewed by the potential the security token market holds (Crypto Briefing)
In early 2018, the SEC sent out information-seeking subpoenas to dozens of ICO startups, and the regulators have begun to circle back. Yahoo Finance reports that the SEC is focusing on those crypto startups who failed to ensure that tokens were sold to accredited investors, encouraging those under scrutiny to settle the cases out of court. The fundamental issue at hand is reportedly whether or not the tokens sold qualify as a security, with the SEC reportedly taking issue with the sale of SAFTs, or Simple Agreements for Future Tokens. The report is essential reading for all watching the ICO versus STO market develop (Yahoo Finance)
The SEC obtained an emergency court order onThursday halting an ICO that falsely claimed it had SEC approval. The founder of company Blockvest even went so far as to create a false regulatory body called the “Blockchain Exchange Commission” with a website mirroring the SEC’s website which contained “approval” for the sale of the coin (CCN)
The SEC struck repeatedly this week, filing a subpoena enforcement action against the Saint James Holding and Investment Company Trust after the company falsely claimed they had “executed a $100,000,000 financing commitment” for an ICO launch for the trust (Coin Telegraph)
Institutional investors are engaging in the most cryptocurrency transactions over $100,000, edging out high-net-worth individuals in this area to become the biggest buyers of large amounts of coins (Bloomberg)
Cryptocurrency is here to stay, at least according to CFTC Chairman J. Christopher Giancarlo. The Chairman stated that he believes there is a future for crypto in the financial world, although that future may be 10 years from now (CCN)
TD Ameritrade is launching their own cryptocurrency exchange, ErisX, which will allow for the trading of Bitcoin, Bitcoin Cash, Ethereum, Litecoin and Bitcoin futures (Coindesk)
Almost $90M has been laundered through 46 different crypto exchanges as reported by the Wall Street Journal on Friday. The WSJ tracked the activity of over 2,500 crypto wallet addresses reportedly associated with criminal activity for over two years and found that exchange ShapeShift AG, who promotes user anonymity, was utilized to launder over $9Mduring this time period (WSJ, CoinDesk)
15 Congressmen requested an update from the SEC as to how they plan to regulate cryptocurrencies in a letter this week to Chairman Jay Clayton. The request comes after a crypto roundtable organized by congressman Warren Davidson led to discussions of fears of stifling innovation in the United States (Coin Telegraph)
Coinbase wants to be “too big to fail”, with founder Brian Armstrong detailing his vision for the future of the multibillion dollar company and the crypto world at large this week in Fortune magazine
Another delay for Bitcoin ETFs at the hands of the SEC, this time for the ETF from Van Eck Securities Corp. The SEC is soliciting more feedback from the public even though more than 1,400 letters have already been received, many purportedly supporting the ETF (and others) (BTC Manager)
This week the New York State Attorney General’s office released the Virtual Markets Integrity Initiative Report, blasting three major cryptocurrency exchanges (Binance, gate.io, and Kraken) for potentially operating without a license in the state and referring them to the state’s Department of Financial Services for investigation. However, information for this report was collected via the 34-point questionnaire that was sent out to 14 exchanges, with the three named above being the only exchanges besides Huobi Global Limited that failed to respond (CCN)
The 32-page Virtual Markets Integrity Initiative Report can be found here and focused on three main areas, including abusive trading, conflicts of interest amongst the exchanges and a lack of safety measures to prevent fraud (NY Attorney General’s office, BTC Manager)
In the ruling against Maksim Zaslavskiy, a fraudulent ICO promoter, a US District judge ruled that securities laws are applicable in ICO token sales. Zaslavskiy defrauded investors of more than $300,000 while falsely claiming the REcoin he was selling was backed by diamonds and real estate. More important than the scam itself are the implications of this ruling, although crypto enthusiasts were quick to categorize this ICO as a violation of securities laws due to its fraudulent nature and the purported function of the coin (CNBC, Crowdfund Insider)
Formal charges were filed by the SEC against a crypto asset hedge fund and an “ICO Superstore” this week:
Crypto Asset Management LP is charged with operating as an unregistered investment company while marketing itself as the first regulated crypto asset fund in the U.S.The company raised $3.6M during an unregistered public offering, which was falsely touted as being regulated by the SEC (CCN)
Token Lot, an “ICO Superstore”, was charged with operating as an unregistered broker-dealer after selling securities, including security tokens, from February to July 2017 (BittPress)
FINRA hit the broker of HempCoin with securities fraud charges this week in its first cryptocurrency-related disciplinary action, claiming Timothy Tilton Ayre encouraged investment into Rocky Mountain Ayre Inc. by fraudulently claiming that HempCoins were “backed by marketable securities” (CCN) If you’re a subscriber to the Wall Street Journal, click here for more on this story
On Wednesday morning, it was reported that Goldman Sachs had abandoned plans to open a crypto trading desk, sending the market into a tailspin. CFO Martin Chavez called the report “fake news” and said that the company is still exploring digital assets. However, the damage was done even as the company announced plans to develop a bitcoin derivative (Fortune, CoinTelegraph, CNBC)
Crypto and stock trading app Robinhood is preparing for the launch of an IPO as they search for a CFO while also beginning the regulatory audit process with the SEC and FINRA to ensure compliance (Coindesk, CoinTelegraph)
The Chicago Board of Options Exchange (CBoE) plans to launch Ethereum futures by the end of the year after the successful launch of their bitcoin futures contracts (Crowdfund Insider)
Last Wednesday, the SEC landed another blow to bitcoin ETFs, rejecting eight more applications. All was not lost, however, as three of the rulings were stayed as the SEC has decided to review the orders of rejection. To explain the reversal, SEC Commissioner Hester Peirce tweeted “the Commission (Chairman and Commissioners) delegates some tasks to its staff. When the staff acts in such cases, it acts on behalf of the Commission. The Commission may review the staff's action, as will now happen here.” (CNBC, Bitcoinist, Twitter)
North Korea plans to host an international crypto conference in October, reportedly hoping to gain access to technology to evade sanctions imposed upon the hermit kingdom (CoinGeek)
A New York state judge permanently banned a NY-based crypto promoter who allegedly scammed investors by offering trading advice in exchange for crypto. The action was kicked off by the CFTC in January when they charged the promoter with fraud and misappropriation of funds (NullTX)
As we continue to wait with baited breath for an approved bitcoin ETF, an exchange-traded note (ETN) called Bitcoin Tracker One can now be traded in U.S. brokerage accounts after being listed on Nasdaq Stockholm since 2015 (CCN)
Although the market is on a steep downturn, cryptocurrency wallet Blockchain claims to register 50,000 new users a day after Coinbase made a similar claim last week (CCN)
Analysts have latched onto a correlation between a rise in overstock.com's share price and the BTC/USD exchange rate, with trends mirroring each other since 2014 (CoinDesk)
The SEC delayed their decision on another Bitcoin ETF this week, sending the cryptomarket into a tailspin. The original decision was set to be released August 16th, but the SEC exercised its right to delay for 45 days as they do additional research. Some analysts more familiar with the regulatory body said this extension was to be expected, as the SEC often delays rulings on ETFs from emerging markets (CCN, NewsBTC)
As mentioned above, the delay greatly impacted markets, as the total market value dropped to $227B on Wednesday, August 8, the lowest since November 2017. However, a rally ensued the following weekend that drove BTC’s price up more than 3 percent. The top 25 crypto assets saw gains around 5-6% during this rally (Coindesk, CoinTelegraph)
The 20-year old hacker who stole cryptocurrency by SIM swapping, including from the wallets of some attendees at the Consensus conference in May, was arrested on July 31 (Bitcoinist)
Intercontinental Exchange, the owner and operator of the New York Stock Exchange, will list “physically settled bitcoin futures contracts”on their new platform named Bakkt (see more below) (CCN)
The London Stock Exchange also entered the cryptosphere this week, with UK-based crypto mining subscription service Argo Mining raising £25M in an Initial Public Offering, exceeding their initial fundraising goal by £5M (Coindesk)
There might be one week that Coinbase doesn’t make Top News of the Week, but this was not that week: the exchange announced plans to explore adding 40 news crypto assets to Coinbase Custody, including Ripple, EOS, Cardano, and Telegram (Cointelegraph)
In other Coinbase news, the exchange partnered with WooCommerce (a WordPress e-commerce platform) to create a plugin that allows for online merchants to accept cryptocurrency as payment for transactions (CCN)
-Yesterday, Bitcoin’s price took a dip after a temporary rally once news hit that the SEC denied Winklevoss-backed trading platform Gemini’s application to run an exchange traded fund backed by Bitcoin (CCN)
-Citizenship can be bought with 12 Bitcoin, at least in Antigua and Barbuda (CCN)
-Nasdaq, the world’s second-largest stock exchange, held a closed-door meeting earlier this week with representatives from half a dozen cryptocompanies in efforts to encourage industry leaders to improve public image and validate their place in international markets (Bloomberg)
-Although the Gemini-backed ETF application was denied this week, there’s still hope for other exchange traded funds as other applications are still pending within the SEC (Coindesk)
-Coinbase continues to dominate the news cycle this week. The exchange made headlines last night after a disclosure published by the U.S. Federal Election Commission uncovered the creation of a Political Action Committee (PAC) by the company. (Coindesk) Rumor also has it that an unnamed major hedge fund, valued at $20B, has begun to use the Coinbase Prime platform to become more comfortable with trading crypto-assets. (CCN)
-China’s crypto-millionaires are using their newfound wealth to purchase real estate in the United States as Chinese regulations become more and more restrictive. (Coindesk)
-JPMorgan is eager to implement blockchain technology, pursuing a patent for a distributed system to issue virtual depository receipts, which, to us at CrowdCrypto News, sound quite similar to Initial Coin Offerings. (CCN)
-The huge amount of developer activity on the Ethereum blockchain has led the CEOs of Circle, Coinbase and other crypto firms to sing its praises, claiming that this cryptocurrency will be the one to lead us out of the dark ages. (CCN)
-The second-largest crypto exchange Binance has backed plans to create a blockchain-powered bank with tokenized ownership (CoinTelegraph)
-Coinbase is exploring adding Cardano (ADA), Basic Attention Token (BAT), Stellar Lumens (XLM), Zcash (ZEC), and 0x (ZRZ) to their sophisticated exchange (Coinbase Blog)
-Following the indictment of 12 Russian intelligence officers for interfering in the 2016 election, details surfaced that indicated that cryptocurrency, including Bitcoin, was used to fund their efforts (Coindesk)
-FINRA has requested that all member firms notify them if engaging or planning to engage in digital assets, in a continued effort to protect investors (NullTx)
-The Digital Assets Notice issued by FINRA is expansive, according to critics, and asks for information far beyond the buying and selling of securities as they are currently defined (Crowdfund Insider)
Along with our regularly-scheduled news recap, this issue featured an in-depth look at the rapid expansion of the Coinbase exchange.
A week ago as of publication, Coinbase Custody accepted its first deposit in a push to entice institutional investors to join the crypto craze. The initial goal of Coinbase Custody is to make the path from digital currency to financial institutions free and clear of unnecessary roadblocks. The company’s CTO Balaji Srinivasan has categorized the exchange as a “mullet”, because they interface with banks and the government while still maintaining a space for crypto enthusiasts. This week, Coinbase Custody service went live and added 10 hedge funds and family offices with plans to attract 100 large institutional customers managing $5B in assets. However, all is not well in Coinbase land, as the broker-dealer the exchange partnered with (Electronic Transaction Clearing) is on the hook with the SEC for “repeatedly putting customer assets at risk”. Additionally, Mashable has keyed into complaints housed at the Better Business Bureau concerning Coinbase amidst the company’s quest to re-brand. Ultimately, here at CrowdCrypto, we are eager to see the entrance of institutional money in the crypto-space and hope that Coinbase’s bravery is the first step in a new future!
🔥🔥🔥As you've probably heard, the biggest news this week (and perhaps since we launched CrowdCrypto News in January) was that SEC Corporation Finance Director William Hinman said Ethereum will not be regulated as a security during his speech at Yahoo Finance's All Market Summit. The markets immediately rebounded after a long slump when the news hit, and crypto experts hit Twitter to both celebrate and temper expectations. Check out Fortune's analysis and Market Insider's explanation of what Mr. Hinman's statement means for the future of cryptocurrency.
🔥🔥🔥After a quiet couple of weeks on the SEC front, headlines came fast and furious this week, with SEC Chairman Jay Clayton appearing on MSNBC to draw a line between utility tokens and digital currencies. Clayton stated thatutility tokens are indeed securities, while digital currencies that replace fiat currency are not.
The SEC continued to stay busy, appointing the first Senior Advisor for Digital Assets and Innovation that will helm the SEC's cryptocurrency task force. The cryptocurrency world remains hopeful about appointee Valerie Szczepanik, as she's represented the SEC in crypto-friendly forums such as Consensus and has spoken up about desire to limit the potential negative effects regulation may have on crypto markets.
Still confused about that New York State BitLicense? Take a deep dive into its requirements and restrictions here, where you'll also find some hopeful news about its replacement.
Tons of news about the EOS blockchain launch happening today, with some more sordid than others. Here's a quick overview of the EOS blockchain launch that has been fundraising for over a year and has raised over $4B in a crowd sale. The blockchain is marketed as a smart contract platform using the Delegated Proof of Stake consensus mechanism for transaction hashing instead of Proof of Work. Not all news is good news, however, as EOS has been accused of manipulating this week's Ether crash ahead of its launch.
This week, the House Financial Services subcommittee reviewed initial coin offerings with the leaders of the Securities and Exchange Commission (SEC) Enforcement Division. Representative Brad Sherman was quoted as saying "You are beginning to do something on initial coin offerings. I would have hoped you would have done more. I hope you shut it all down … It will be interesting to find out what barriers you face in doing that.” However, other representatives remained optimistic about cryptocurrency and the potential the new technology may bring.
In crowdfunding news, The Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) was signed this week with most news outlets focusing on the rollback of strict Dodd-Frank restrictions; however, buried deep in the bill was a facelift for Regulation A+. Prior to this act, Reg A+ rules prohibited companies from using the exemption if it is subject to SEC reporting requirements under Section 13 or 15(d) of the Securities Exchange Act. This means any company listed on a national exchange was prohibited from participating in an Reg A+ raise. However, with the passage of S. 2155, reporting companies can now utilize Reg A+, and the bill also reduces the reporting requirements for companies completing Reg A+ Tier 2 offerings.
Coinbase reached out to regulators about obtaining a federal banking charter earlier this year, as reported this week by the Wall Street Journal. Officials at the exchange spoke to the U.S. Office of the Comptroller of the Currency about receiving the federal banking license which would allow for Coinbase to offer its own custody and payment services, thereby attracting more institutional investment.
The SEC launched a fake ICO website to highlight the ease in which scam ICOs take advantage of investors. Found here, the SEC website advertises the "HoweyCoin" sale, and when "Buy Coins Now" is clicked, the site redirects to a list of ICO 🚩red flags🚩 on the SEC website.
🔥🔥This week, CFTC Chair J. Christopher Giancarlo co-signed a powerful pro-crypto speech made by SEC Commissioner Hester Peirce earlier in the week, in which she stated "The best path forward is for regulators to approach ICOs and tokens with intense curiosity. We must put in the effort to learn about these new technologies and employ the staff necessary to support our understanding."
In addition, Blockchain based company Prometheum claims they've "cracked the code" as to how to successfully run a compliant Regulation A+ token sale and have filed to make their Reg A+ securities offer public in Q3 of 2018. The company plans to launch a securities ecosystem for compliant ICOs in early 2019. You can read the SEC filing here.
This week at CrowdCrypto we were on the edge of our seats about the lawsuit against Ripple Labs. Was the XRP ICO an offering of securities? This Medium writer thinks so. Ripple Labs is facing a lawsuit from a investor after he reportedly sustained a loss of 32% after trading XRP tokens. According to the complaint, the investor did not expect to lose money on the investment after Ripple Labs retweeted a positive article about XRP and the attendance of its CEO, Brad Garlinghouse, at various cryptocurrency conferences. The complaint (which can be found here) alleges that the sale of XRP violates U.S. securities laws. In international news, Blockchain and crypto organizations in Switzerland, Kazakhstan, and Armenia have joined a lawsuit filed by organizations in Russia, China, and South Korea against major Internet companies for banning crypto advertising. The suit will be filed in New York in late May 2018 with funds for attorneys being collected on a digital wallet registered in Estonia.
More grey area for crypto regulation this week, as SEC Chairman Jay Clayton met with the US House of Representatives Committee on Appropriations on Thursday and described regulation as a “complicated area”. He clarified that its believed bitcoin is not a security; however, he believes other tokens clearly fit the bill of a security, saying “there are none that I’ve seen that aren’t securities”. Clayton indicated that the ball was in the court of issuers, saying “securities regulations are disclosure-based”, and after being asked whether or not startups are being transparent, Clayton said “no”.
After a few quiet weeks on the regulatory front, news broke that cryptocurrency investors Andreessen Horowitz and Union Square Ventures appealed to the SEC in a meeting in late March for a cryptocurrency safe harbor while assuring the regulators that ICO issuers would be held to strict anti-fraud measures. The group advocated for a safe harbor, which would allow for some tokens to be categorized as utility tokens instead of securities. This news follows reports that Joe Cammarata, president of tZero, was set to meet with 40 regulators at the SEC to discuss the regulation of ICOs.
Cryptocurrency exchange Coinbase approached SEC regulators with plans to register as a licensed brokerage this week, as first reported by The Wall Street Journal this week. Registration would permit the exchange of tokens deemed to be securities by regulators. This week also saw the beginning of crypto creators distinguishing themselves from securities. The chief market strategist of Ripple told CNBC that Ripple (XRP) is not a security, saying "we don't meet the standards for what a security is based on the history of court law".
This was a week of SEC action and clarity, with SEC Jay Clayton saying "Just because it's a security today doesn't mean it'll be a security tomorrow, and vice-versa." Clayton seemed to soften his stance on ICOs during a speech at Princeton University. Making clear the difference between what utility tokens claim they are versus what they actually are, Clayton conceded that the definitions can evolve over time and the only way to ensure consumer safety is to be informed about the developing world of cryptocurrency.
This week, Twitter announced that they were no longer allowing cryptocurrency and ICO advertisements on the platform. Analysts believe this ban spurned the continuous decline of the crypto market this week although clarity as to the market's future was non-existent. Although the market seems grim, some participants believe the boom is still coming, with cryptocurrency investment app Abra’s CEO telling Business Insider that he believes the market is set to boom as western institutional money will “begin to dip its toes” into cryptocurrency this year.
In this issue, we check out the SEC's new website concerning ICOs to its website with guidance and suggestions for consumers, investors, and market professionals. It was also reported that Russia worked alongside the Venezuelan government to launch the cryptocurrency with Putin's personal approval. Two of the key Russian advisors had ties to major Russian banks and were thanked by President Maduro for "aiding his fight against American 'imperialism'".
🔥🔥🔥"I believe this is hello, not goodbye" said Rep. Bill Huizenga (R-MI) this week at the closing of the hearing that the US House Capital Markets, Securities, and Investment Subcommittee held to examine cryptocurrencies, ICOs and the lack of regulatory control. Some other notable/quotable soundbytes from the event:
"Cryptocurrencies are a crock...they allow a few dozen men in my district to sit in their pajamas all day and tell their wives they are going to be millionaires"-Rep. Brad Sherman (D-Calif).
"I hear elected officials who don't have any concept of what we're dealing with here...talking about 'we have to go in and regulate".-Rep. Tom Emmer, member of the Congressional Blockchain Caucus (R-MN).
Indeed, the event devolved into what critics say was a hearing for crypto bashing and little else, with the end of regulation speculation even less predictable than before. For a less sensational summary of the hearing,click here.