Indian Securities Regulator to Restrict IPO Promoters from Holding Bitcoin: Report

India’s securities regulator is reported to be working on barring all IPO organizers from holding cryptocurrencies. This is another statement move from the government following its cryptocurrency ban.

The Indian government has shown no subtlety in its approach to banning cryptocurrencies from the country.

Now, it appears to be extending its anti-crypto stance to the traditional financial industry. Initial Public Offerings (IPO) promoters would be the first to feel its wrath.

No Crypto for Fundraisers

Recently, the Economic Times reported that the Securities and Exchange Board of India (SEBI), India’s securities regulator, is planning to force all IPO participants to divest all crypto holdings before proceeding with their listings.

Per the report, crypto selloffs will most likely become a prerequisite for anyone looking to raise funds through an IPO, forming what the latest in New Delhi’s plans to eradicate digital assets is.

The news source reported that the SEBI plans to send notices to merchant banks, underwriters, securities lawyers, and all other stakeholders in India’s IPO space, warning them to stay off digital assets.

A securities lawyer told the news source that this would most likely be a government directive, as they could believe that an IPO promoter holding an illegal asset could pose a risk to investors.

Some investment bankers have also explained that the SBI might move ahead with the restriction even if the Reserve Bank’s ban on digital assets doesn’t pass parliamentary approval – an improbable process on its own.

Mahesh Singhi, an executive at investment banking firm SInghi Advisors, explained that SEBI is looking to avoid a situation where IPO promoters divers their raised funds to crypto investments, which remain highly speculative.

SEBI has yet to release any written notifications to that effect, but many stakeholders seem to believe that this restriction will come into effect soon.

No Time to Waste

The IPO restriction is the latest approach from the Indian government, which has vowed to disrupt the crypto sector in the country. First announced last month, the ban is gaining traction ahead of a presentation at the country’s lower parliament.

Titled the “Cryptocurrency and Regulation of Official Digital Currency Bill,” the proposal is already in consideration at the Rajya Sabha, India’s upper house of parliament. However, the current budget session is expected to run till April 8, with a recess session already ongoing until March 7.

Earlier this month, local news source CNBC-TV18 reported that the government might as well skip the parliamentary process altogether. Per the report, it could look to take the “ordinance route” to ban the use of private digital assets while also allowing the Reserve Bank to create a digital framework for its planned Central Bank Digital Currency (CBDC).

CNBC-TV18 reported that all appropriate parties had already begun drafting the ordinance as they look to pass the crypto ban proposal within a month. Ordinances usually allow the Indian government, through President Ram Nath Kovind, to bypass parliament and take action.

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Author: Jimmy Aki

Zurich-based Crypto Broker AG Receives Securities License from FINMA

Crypto Broker AG has obtained a securities house license from Swiss financial regulator, the Swiss Financial Market Supervisory Authority (FINMA) that will allow the company to offer services to institutional investors — “a significant milestone (that) caps a successful previous year,” the broker said in a statement Monday.

The firm is based in Switzerland, which has crypto favorable regulations, while major banks still stayed largely away from offering blockchain-based services.

Moreover, the securities license has been granted to a handful of companies that includes Sygnum and SEBA. Calling this a “pivotal moment,” Jan Brzezek, founder and CEO of the Crypto Finance Group, said, with this license,

“We will be able to offer our professional – and regulated – services to even more financial institutions, enabling them to enter this new asset class.”

Receiving the license means the broker can now hold funds on behalf of its clients as well, a feature which is “highly relevant for institutional clients, as many do not have their own capability.”

AG’s clients traded more than $1 billion in assets last year, with its digital operations growing “exponentially.” The company expects to further expand its business in 2021.

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Author: AnTy

SEC Chairman Jay Clayton Goes Out with a Bang

The parting shot leaves the crypto market red, a BTD opportunity.

  • US Securities and Exchange Commission Chairman Jay Clayton’s last day as the Wall Street top regulator was on Wednesday.
  • While exciting news to the crypto community, Clayton’s parting shot provided the industry with a red market.

On Tuesday, SEC charged Ripple and its former CEO Chris Larsen and current CEO Brad Garlinghouse, after seven years, for selling $1.3 billion unregistered securities offering in 2013.

This resulted in the price of XRP crashing 58% this week. This led to a market-wide sell-off that wiped out $62 billion since Monday when Garlinghouse first reported about the upcoming charges.

However, Bitcoin was largely unaffected, going down to only $22,700 and we are back above $23,000 already.

This crypto carnage can also be seen as a blessing in disguise as it gave investors an opportunity to buy the dips amidst the raging bull market.

Clayton had previously announced that he will be stepping down by the end of this year. In a statement posted on SEC’s website, Clayton said he submitted a letter to President Donald Trump informing him of his decision to leave the agency this week.

While Trump is likely to have ‘Crypto Mom’ Hester Peirce or Elad Roisman as acting Chairman, President-elect will be picking a permanent successor to Cayton. Biden will be sworn in as US President on January 20. Clayton, a former partner at Sullivan & Cromwell, wrote,

“It has been the honor and privilege of my professional life to serving the American people as Chairman of the U.S. Securities and Exchange Commission.”

Clayton praised the SEC for keeping the financial markets function through the coronavirus pandemic and its efforts to modernize regulations. He added,

“The absolute trust and unwavering support you and your economic team provided to me and the 4,500 women and men of the Commission has enabled us to pursue our mission to the benefit of the more than 65 million American households who invest in and depend on our markets.”

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Author: AnTy

Germany Passes Law to Allow Electronic Securities on Blockchain

Germany, the largest economy in Europe, has passed a law that will allow all-electronic securities to be recorded and traded based on blockchain technology. According to Reuters’ report, this is part of a more effective strategy by the country’s Finance Ministry to integrate existing ecosystems with blockchain.

The newly passed legislation does away with paper certificate requirements for selling securities within Germany’s financial markets. Stakeholders who pivoted towards this shift cited lengthy administrative processes that have often been a barrier.

While the paper certificate may have acquired sentimental value, the future belongs to an electronic version, according to Olaf Scholtz, Germany’s Minister of Finance. Scholtz said that,

“The paper certificate may be dear to some for nostalgic reasons, but the future belongs to its electronic version.”

Meanwhile, Germany is still making significant strides in the nascent crypto industry has released new guidelines that recognize crypto assets as financial instruments earlier this year. Its second-largest stock exchange, Börse Stuttgart, is also working to integrate security tokens to shift to virtual assets.

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Author: Edwin Munyui

Fidelity-backed OSL Becomes World’s First SFC-Licensed & Insured Crypto Exchange

Fidelity owned BC Technology’s OSL Digital Securities has finally obtained the Securities and Exchange Commission’s license to become the world’s first SFC-licensed, listed, digital asset wallet-insured, Big-4 audited digital asset trading platform for institutions and professional investors.

One of Asia’s most prominent digital asset platforms for investors, OSL is now licensed to conduct Type 1 (dealing in securities) and Type 7 (automated trading service (ATS)) regulated activities.

Besides the Hong Kong licenses, OSL has also applied to the Monetary Authority of Singapore for a digital asset license under the Payment Services Act.

OSL can now legally operate regulated brokerage and automated trading services for digital assets. Once it goes live, which is to be announced in the coming weeks, OSL will offer trading access to Bitcoin, Ethereum, and other cryptos along with selected security token offerings (STOs). OSL CEO Wayne Trench said,

“Institutional investment in Bitcoin and other digital assets has rapidly accelerated over the past several years, and has entered a new era of growth in Hong Kong with licensing.”

“Institutions, and other professional investors, including HNWIs and family offices, can now trade digital assets with the region’s most comprehensive and trusted digital asset platform in OSL.”

The company already opted into SFC’s virtual asset regime, and now it has completed its rigorous vetting program.

According to the official announcement, the same heightened level of regulations has applied to digital assets that govern the securities markets so clients can trade with confidence under the safeguards they are accustomed to.

OSL customers will have to undergo “rigorous” KYC and AML measures while benefitted from the additional insurance protection on digital assets. OSL Head of Distribution and Prime Matt Long noted,

“Licensed entities are the future of digital assets and capital markets in the digital age, and professional investors, hedge funds, and family offices are now rapidly increasing portfolio allocations to digital assets such as Bitcoin.”

The digital platform had “exceptional” growth in 2019 and the first half of 2020 with a year-on-year revenue increase of 47%, driven by annualized trading volumes of $28 billion in the first six months of the year.

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Author: AnTy

SEC Commissioner Urges to ‘Embrace’ the Personal Financial Liberty as Crypto & DeFi Gains Adoption

Commissioner Hester M. Peirce of the U.S. Securities and Exchange Commission (SEC) made new remarks on Thursday urging regulators to honor the right to financial freedom.

Talking about the digital assets sector, Peirce, who is known as ‘Crypto Mom’ in the industry, said crypto-regulation is one area where “intersection between personal liberty and regulation looms large.”

She noted the new challenges posed by crypto because they are rooted in a key principle of people’s fundamental right to engage with one another without a trusted third party. At the same time, regulators are used to dealing with intermediaries “because they are easy to grab hold of and regulate.”

Peirce discusses how these challenges are growing as crypto evolves while the SEC struggles with the issues with their regulatory nature.

Now with the explosion of decentralized finance, they “will pose thorny questions and decisions for us in the coming years.”

Reembrace national passion for personal freedom

Peirce remains an advocate for the crypto industry. Once again, she wants regulators to “figure out a way to embrace the personal liberty principles undergirding it,” especially now that crypto is gaining adoption outside and inside the legacy financial system. She said in her speech,

“If we were instead to steamroll the technology’s liberty-enhancing features under the weight of regulation, we would lose a lot of the power of the new technology to afford opportunities to people whose autonomy has previously been curbed by.”

According to her, regulators are using climate policy as a disguise as it “does not raise the same kind of fears that other types of central planning would.” Peirce said,

“The decentralization of crypto is the opposite of central planning, which is making something of a comeback, with financial regulation as one of its primary tools. After an unsuccessful history, people would reject central planning out of hand unless it came in a disguise. The disguise of the day is climate policy.”

Directing these efforts through financial regulation will only make the capital markets less effective and more brittle at serving all sectors of the economy.

The crypto-friendly SEC commissioner also touched upon the accredited investors, which requires a person to be wealthy or have a high income. Although the accredited investor category has been expanded slightly, Peirce added,

“the presumption that people need to entreat a regulator for permission to invest still offends principles of personal liberty, which allow people both to earn and spend money as they see fit.”

Today’s “well-intentioned regulations” are very much in tension with personal liberty, and Peirce wants the regulators to “reembrace our national passion” for individual freedom.

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Author: AnTy

SEC Chairman Jay Clayton to Step Down By Years End; Will Crypto Regulations Ease?

Jay Clayton is set to step down as the U.S. Securities and Exchange Commission (SEC) chairman by the end of this year.

Clayton, who has been at the agency’s helm since May 2017, stated he would be departing six months from his scheduled exit. He was expected to step down in June next year.

Appointed by President Donald Trump and sworn in as chair in May 2017. His early departure could have accelerated by the apparent election of Joe Biden as the next president, it still remains to be seen who might replace him. Stating,

“I would like to thank President Trump for the opportunity, and the support and freedom, to lead the women and men of the SEC.”

The chair also thanked Secretary Mnuchin as well as the entire treasury for their support and assistance. He also praised other agencies in the treasury department for their close working relations.

According to a statement from the SEC, Through Clayton’s leadership, the SEC improved the capacity of businesses of different sizes to raise capital and strengthen the enforcement of programs. The report said:

“The Commission obtained orders for over $14 billion in monetary remedies, including a record $4.68 billion in fiscal year 2020, and returned approximately $3.5 billion to harmed investors.”

“In addition, during Chairman Clayton’s tenure, the Commission paid approximately $565 million to whistleblowers, including the largest single award in the program’s history ($114 million).”

The SEC also stated that Clayton was steadfast in the enforcement of different policies and regulations within the crypto space. His tenure coincides with the recent largest Bitcoin’s bull run and the 2017 ICO’s wave.

Clayton was a controversial figure in the crypto space for his hard stance that almost all the ICOs were offering unregistered securities. Notably, however, Clayton opined that Bitcoin was not a security as well as Ethereum too. Later, the SEC reaffirmed this opinion.

In his tenure, Clayton has seen the SEC institute fines on numerous crypto projects which ran ICOs. Over the last year alone, the SEC collected about $1.26 billion as fines from different crypto projects. His departure is seen as a welcome move from the crypto and blockchain community.

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Author: Joseph Kibe

SEC Raises the Crowdfunding Limit; A Better Alternative to ICO, IEO, & Venture Capital

The US Securities and Exchange Commission raised the limit on crowdfunding from $1.07 million to $5 million, making it easier for startups to raise money from non-accredited investors.

With a 3-2 vote on Monday, several exemptions were made to federal securities legal guidelines that require issuers to register with the SEC and publish monetary statements.

Many financial instruments are categorized as securities, and to offer security, one is either required to register, which is a time-consuming and expensive process, or fall under the exemption such as Reg A, Reg D, which now also involves Reg CF or Reg Crowdfunding.

With this rule change, companies are now provided with more flexibility.

“This means entrepreneurs can raise more money and do so more easily,” said Bruce Fenton, CEO of CEO Chainstone Labs. Adding,

“This is huge – $5 million is significant enough to attract much larger and more high quality issuers. The small business sector will be rebuilt — this is a step to accelerate that. Reg CF also sidesteps the accredited requirement- an antiquated thorn in the side of innovation.”

The change in the rules is the newest assistance to small and medium-size corporations following the expansion of accredited investors’ definition in August.

SEC Chairman Jay Clayton said the rule would “improve effectivity and facilitate capital formation,” and that it might cut back regulatory prices and burdens for corporations.

“Huge for companies from non-tech hub cities, underrepresented founders, and less sexy industries,” said Ryan Selkis of Messari.

Meanwhile, Shehan Chandrasekera, Head of Tax Strategy CoinTracker, says this brings a better alternative for crypto companies that usually goes the route of Initial Coin Offering (ICI), Initial Exchange Offering (IEO), and venture capital.

“REG Crowdfunding limit went up to 5M from 1M per SEC. A better alternative to an ICO or IEO,” he said.

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Author: AnTy

SEC Goes After John McAfee, Who Made Over $23 Million in Fraudulent ICO Promotions

SEC’s next target, finally, is John McAfee. In just a week, the US Securities and Exchange Commission went after BitMEX, and the 74-year-old software magnate turned crypto bull.

McAfee was reportedly nabbed in Spain today and is now facing extradition to the US over charges of fraud for promoting initial coin offering (ICO) and tax evasion, facing a maximum sentence of five years in prison on each count of it.

McAfee earned millions in income from promoting cryptocurrencies and other activities and failed to file tax returns from 2014 to 2018, “despite receiving considerable income from these sources,” as per the indictment.

The cybersecurity entrepreneur allegedly evaded his tax liability by directing his income to be paid into crypto exchange accounts and bank accounts in the names of nominees. The DOJ also details that they didn’t find any connection with the “anti-virus company bearing his name.”

While DOJ’s charges against McAfee are a bit dry, SEC’s 55-page filing is far more interesting that details McAfee’s alleged fraudulent activity promoting several ICOs throughout 2017 and 2018. The SEC complaint reads,

“McAfee leveraged his fame to make more than $23.1 million U.S. Dollars (“USD”) in undisclosed compensation by recommending at least seven “initial coin offerings” or ICOs to his Twitter followers. The ICOs involved the offer and sale of digital asset securities and McAfee’s recommendations were materially false and misleading for several reasons.”

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The suit doesn’t mention the name of the ICOs but points out that he did not disclose that he was being paid for ICO promotions, violating federal security laws, and even lied to investors by falsely denying that he was paid by the issuers.

He also falsely claimed himself as the investor and technical advisor when in reality, his tweets “were paid promotions disguised as impartial investment advice.”

SEC claims McAfee’s bodyguard, Defendant Watson, also substantially assisted him in his schemes and negotiated the deals with ICO issuers for which he was paid at least $316,000.

McAfee himself received over $11.6 million in Bitcoin and Ether and an additional $11.5 million worth of promoted tokens, “as undisclosed compensation for his promotions of seven ICOs.”

The lawsuit also mentions John McAfee promising to “eat my d**k on national television” if his $1 million BTC price prediction didn’t pan out, which of course, didn’t and later he called it a “ruse.”

The SEC is seeking to get the defendants to pay civil monetary penalties, prohibiting them from participating, directly or indirectly, in the issuance, purchase, offer, or sale of any digital asset security, disgorge all ill-gotten gains received, and to get the investors appropriate relief.

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Author: AnTy

Chairman Jay Clayton: The SEC is Open to Tokenizing ETFs Despite Recent Clampdowns

The Chair of the U.S Securities Exchange Commission (SEC), Jay Clayton, has said that the agency is open to discussing tokenized exchange-traded funds (ETFs). He was speaking at a Chamber of Digital Commerce webinar held on Oct 2, where he highlighted that ‘It may very well be the case that […stocks] all become tokenized.’

Despite a struggle to stay in the loop on crypto innovations, the latest sentiments by Clayton signal SEC’s openness to its underlying potential. A tokenized ETF will allow American investors to access stock indices in the form of tokens, hence Clayton’s futuristic view of integrating traditional instruments with modern-day tech ‘tokenization.’ Clayton said in a Decrypt report,

“We’re willing to try that; our door is wide open. If you want to show how to tokenize the ETF product in a way that adds efficiency, we want to meet with you, we want to facilitate that.”

SEC Actions Paint a Different Picture

While the SEC Chair appears to have taken an open stance towards tokenization, the agency’s recent clampdowns on crypto businesses state otherwise. Some industry players that have faced the SEC wrath this year include Abra, a crypto investment platform that offers clients stocks in tokenized versions. The firm was fined around $300,000, split between CFTC and SEC, given that both agencies were pursuing Abra.

Other than the clampdowns, SEC has rejected several Bitcoin ETFs citing that the BTC price can easily be manipulated. Clayton said,

”We got off on the wrong foot in this innovation. There was the theory that because it was so efficient because it could have had so much promise, we could toss aside some of those principles of responsibility and transparency.”

He was eager to note that the SEC has to stay true to its role by identifying product launch issuers in America’s financial markets. On this, he further mentioned that they are still in pursuit of ICO issuers who might have breached U.S securities regulations during the ICO boom in 2017. It also appears the SEC is entirely against the narrative of ‘payment networks,’ but instead views ETF’s a financing vehicle,

“What we don’t like is when someone says, ‘you know, the function is payments … Don’t pretend that it’s a payment system when it’s actually a financing vehicle.”

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Author: Edwin Munyui