Bitcoin Needs Optimal Regulations Before Major Exchange Listings, SEC Chair Affirms

Jay Clayton, the chairman of the U. S. Securities and Exchange Commission, recently stated that Bitcoin (BTC) needs to be better regulated before it can be traded on major exchanges.

According to him, the crypto markets are largely unregulated and prone to manipulation. Bitcoin, he affirmed, does not have the same discovery process that many assets have in exchanges such as Nasdaq and the New York Stock Exchange (NYSE).

He believes that society needs to reach a place in which Bitcoin is better regulated before it is widely adopted. People need confidence that they can trust the market. Price reports, he affirmed, do not indicate price discovery.

Clayton also stated that the exchanges need to create more protection for their clients before the big investors come in. Insurance and protection against hackers are two important points in this regard.

Related to all this, there are reports that most Bitcoin trading is fake since the start of the year, which compromises the image of the industry even more.

The Bitcoin ETF Is Far Away

All these claims make it clear that the awaited Bitcoin exchange-traded fund (ETF) will not be a reality anytime soon. Clayton has often affirmed that there is a lot of work to be done before the ETF is real, despite noting that some progress is, indeed, being made.

Because of this, the SEC is most likely going to reject the Bitcoin ETF proposals of Wilshire Phoenix and Bitwise Asset Management. The other ETF proposal, the one made by VanEck/SolidX, was withdrawn by the company, as they feared that approval was unlikely.

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Author: Gabriel Machado

tZERO Teams Up With Entertainment Financing Startup BLOQ FLIX To Tokenize Films

Overstock’s subsidiary in charge of tokenizing securities, tZERO has partnered with entertainment financing firm BLOQ FLIX to come up with a technology service which will help BLOQ FLIX to tokenize its financing options in the entertainment industry. The partnership means that the tokenization will be done using tZERO’s protocol technology.

According to Yahoo Finance, the partnership dubbed ‘ Blockbuster meets blockchain’ the two companies will create a fresh film financing mechanisms for television, studio initiatives as well as the internet. Through the tZERO tokenization platform, BLOQ FLIX is set to make it easy for investors to take part in the financing process.

tZERO CEO Saum Noursalehi expressed his gratitude on the partnership saying that the two companies will be able to provide secure and innovative investment options to finance film projects. Noursalehi added that his company’s aim is to tokenize as well as trade assets which have the potential to benefit from blockchain technology and the tokenization of film financing is a step towards the realization of tZERO’s goals.

Brandon Hogan and Jonathan Helmuth are BLOQ FLIX’s founders who have immense experience in financing entertainment projects and the duo has managed to raise about $100 million worth of production funds and have directly been involved in more than 150 entertainment projects.

Hogan, who is BLOQ FLIX CEO, has worked in the film industry for more than 25 years. The CEO said that the financing modalities in Hollywood need to evolve and his company is taking the front seat in disrupting how the conventional media is financed. The CEO said that through embracing blockchain technology, the two firms will be able to streamline the film funding process as well as provide access to funding to small studios and producers.

Brokerage firm, JumpStart Securities, will act as the placement agent for the offerings provided by the two firms.

Jonathan Self JumpStart CEO stated that the partnership will allow BLOQ FLIX as well as other investors to change the way media content is financed.

According to CoinDesk, tZERO revealed in July that it was in the process of raising about $40 million in funding for Biopic, owned by Atari founder, together with film production as well as financing firm Vision Tree.

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Author: Joseph Kibe

SEC Chair Talks About Bitcoin ETF: There Is Still Work Left To Be Done

The Chairman of the U. S. Securities and Exchange Commission (SEC), Jay Clayton, has recently talked about the Bitcoin exchange-traded fund (ETF), which is one of the main interests that crypto traders have. According to the chairman, the market is making some progress, but there is still work left to be done before the ETF can finally be approved.

He was recently interviewed by CNBC and claimed that there are still concerns, despite visible progress. According to him, there is one central question: how to trust an asset which has its price based on unregulated exchanges.

Clayton affirms that most exchanges are not regulated, so they can engage in manipulation easily. Because of this, people need to be comfortable with the answers to this kind of question before they can really determine how to deal with a possible Bitcoin ETF. These questions, Clayton believes, are far from trivial.

His answers indicate the position that the SEC will take in the upcoming decision about the ETF, which is set to happen in a few weeks from now. Unfortunately, it seems unlikely that these proposals will pass.

One of them was submitted by VanEck and SolidX together with CBOE. The other Bitcoin ETF proposal was created by Bitwise Asset Management with NYSE Arca. Both of them made an effort to convince the SEC to approve them, but it does not seem that their arguments were compelling enough to fully convince Clayton.

The final deadline for these proposals to be accepted or rejected is October 13 for Bitwise and October 18 for VanEck and SolidX. Only then we’ll have the official answer, but the answers may indicate that the Bitcoin ETF will not be launched in 2019.

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Author: Lillian Peter

VanEck/SolidX to Launch Limited Option Bitcoin ETFs for “Qualified Institutional Investors” on Sept 5

VanEck Securities and SolidX Management announced plans to launch an institutional-grade Bitcoin exchange-traded funds (ETF) for accredited institutions such as hedge funds, banks, etc. The Bitcoin ETF will not be available to retail investors yet.

The Rule 144A Exemption

The Securities Exchange Service Commission (SEC) postponed the decision to approve VanEck/SolidX Bitcoin ETFs hence the latest use of an exemption Rule 144A law that allows sale to ‘qualified institutional buyers’. A press release from the firms confirmed that the Bitcoin ETFs will finally be issued out – albeit with limited options – starting this Thursday.

“Rule 144A modifies the Securities and Exchange Commission (SEC) restrictions on trades of privately placed securities so that these investments can be traded among qualified institutional buyers, and with shorter holding periods—six months or a year, rather than the customary two-year period.”

The companies will use SEC’s Rule 144A exemption to sell their shares in the Bitcoin Trust which in turn exposes them to the ETF. Only a select group of companies will be eligible to participate in the ETF sale, but not retailers.

A Hope for Approval?

The new asset class becomes the first-ever institutional-grade asset providing “exposure to BTC and enabling a standard ETF creation-and-redemption process.” This will increase the liquidity of Bitcoin across the board offering qualified institutions a physically-backed Bitcoin asset product available in traditional markets and brokerages.

The director of digital asset strategies at VanEck/MVIS, Gabor Gurbacs is looking forward to success of the product as they await on the decision of the SEC. He said,

“This Qualified Institutional Buyers (QIBs) only 144A Bitcoin product may pave the way for institutional Bitcoin adoption and showcase that an appropriately regulated ETF structure can work in practice.”

Daniel H. Gallancy, CEO of SolidX, shared similar sentiments and looks at a bright future for the product. He commented,

“We view the product as an exciting next step for SolidX and VanEck in our partnership as we work to bring institutional-quality crypto asset products to the marketplace.”

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Author: Lujan Odera

Bitqyck Crypto Exchange Settles with SEC on Charges About Committing Token Sale Fraud

The U.S. Securities and Exchange Commission (SEC) has recently announced that it would settle the charges related to Bitqyck, a cryptocurrency token issuer which was accused of being a fraud. The two founders of the company, Sam Mendez and Bruce Bise, raised $13 million USD selling the tokens of their company to over 13,000 investors.

However, the sale of the tokens, which were deemed as securities by the regulators, was illegal because they were unregistered. According to the SEC, the goal of the tokens was to work like securities, as they provided a share of the company’s stocks via a smart contract.

Another accusation was that the company did not own any of the mining facilities that it affirmed to have. This company received $4.5 million USD from the investors but was not completely truthful when it disclosed its business.

According to David Peavler, a regional director of the SEC, digital assets such as this one can look appealing at first, but they might be dangerous investments.

During its investigations, the SEC was aided by the Texas State Securities Board and Hawaii’s Securities Commissioner Office.

Now, the company has decided to settle the matters and will pay around $8.5 million USD in penalties. Each of the founders will also have to pay over $850,000 USD.

This is part of a current trend that the SEC is following of prosecuting companies that offer illegal securities. Over 40 companies focused on the blockchain technology and cryptos were prosecuted so far.

One of the most high-profile cases involving the SEC the one related to the messaging platform Kik, which was charged in around $100 million USD.

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Author: Bitcoin Exchange Guide News Team

ICO Ratings Initial Coin Offering Ranking Service Receives Cease and Desist Letter From The SEC

The U. S. Securities and Exchange Commission (SEC) has recently decided to emit a cease and desist order against ICO Rating, which is a company focused on researching about the crypto market and rating the best investments.

According to the SEC, ICO Ratings has violated the Securities Act. The company is being accused of describing securities to get a certain direct or indirect compensation from the group that issues the investment.

This happened because the company charged fees in order to create the reports of the investments. As some of the tokens listed on the platform were considered securities, the company broke the law. The illegal reports were also widely published on social media, which is also against the norms.

The SEC affirms that ICO Rating was paid over $100,000 USD by companies and groups that issued ICOs to have them rated. These payments, however, were never disclosed to the readers of the site, meaning that they could end up investing in these security tokens without knowing that they were seeing something that the SEC considered to be a paid promotion.

ICO Ratings was ordered to cease all activities, give the money back (plus interest) and then pay a civil money penalty that would be over $160,000 USD.

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Author: Gabriel Machado

Former Head Of SEC’s Cyber Unit Is Moving To Coinbase’s Law Branch

Robert A. Cohen, the former head of the U. S. Securities and Exchange Commission (SEC) Cyber Unit, will be joining Coinbase’s law firm Davis Polk & Wardwell LLP soon. According to the reports, he is the newest partner in the company.

The executive worked with the SEC for 15 years and quit last month. Every eye was on him ever since, as people were wondering where he would go. After his departure, the division of the SEC is without a leader temporarily, as no one was announced to take his place.

His former unit was, in fact, very focused on the crypto world. It was created back in 2017 by the SEC to check issues involving the blockchain technology.

During his work with the cyber unit, Cohen oversaw several lawsuits and legal activity. He also got famous as he pursued legal action against several Initial Coin Offerings (ICOs). One of the most high-profile cases was the one against Kik Interactive, which happened recently.

Recently, Cohen affirmed that the SEC carefully choose who to go after. Their goal was to get some high-profile cases in order to get the word out. This way, more companies would understand the risks of illegal ICOs and would stop it without the SEC needing to go after every company out there.

Now, Robert A. Cohen has changed sides and will help Coinbase. He is, however, legally barred from speaking with any SEC official for around a year. There are regulations which prevent him from using too much of his influence now that he is out of the public service.

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Author: Gabriel Machado

SEC Delays The Decision Again For 3 Bitcoin ETFs (Bitwise, VanEck/SolidX and Wilshire Phoenix)

The U. S. Securities and Exchange Commission (SEC) has decided for the delay on the decision about three different Bitcoin exchange-traded funds (ETFs). These were the most recent ETFs, the ones filed by VanEck and SolidX, Bitwise Asset Management and Willshire Phoenix. If approved, they would be launched at CBOE BZX and NYSE Arca.

As the official time for a decision, 240 days, was about to be reached, the decision of the SEC was very unsurprising: they simply decided not to make the decision right now.

According to the SEC rules, the entity will have until October 13 and 18 to decide for the Solid X and Bitwise ETFs and until September 29 for Wilshire’s ETF.

Bitcoin ETFs Are Very Hard To Approve

Unfortunately, it is simply extremely hard to approve an ETF right now. The SEC is very concerned about market manipulation in the crypto market, so it is very unlikely to approve any of it while the issues are not properly addressed.

As the SEC sees the crypto market as still very unregulated and prominent to manipulation, the entity has several concerns about what an ETF might mean. A lot of BTC trading is said to be wash trading and several whales (wealthy investors) have the means to move the market the way they want to.

Because of all these issues, it is considerably hard to believe that the ETF will be out anytime this year, as none of the three companies have provided any guarantee that the market will not suffer from manipulation.

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Author: Bitcoin Exchange Guide News Team

Tokenized Securities Can Be Settled on tZERO’s Public Blockchain, Following Patent Win

  • tZERO can now settle transactions involving tokenized securities on a public blockchain ledger.
  • The tech platform is a subsidiary of Overstock.

Overstock’s tZERO platform makes it possible to participate in security token trading, and they’ve been making progress in their presence in the cryptocurrency industry lately. According to The Block, the subsidiary has just been granted a new patent that allows tokenized securities to be settled on the public blockchain directly.

tZERO announced the news on Tuesday, saying that the new technology will record trade data, along with the on-chain settlement data. The tech, which is being called Time Ordered Merkle Epoch (TOME), will post these details to the public blockchain ledgers. The use of TOME will also create a record of transactions that is fully immutable and auditable.

CEO Saum Noursalehi stated,

“It can be used in our suite of products, as well as licensed to companies across various industries that are seeking to maintain a tamper-proof and auditable record of time-series-based data.” Noursalehi added that the announcement shows the company’s “technological leadership in blockchain innovation.”

This is not the first patent that tZERO has gotten this year. Earlier in 2019, the platform secured a patent to create a “Crypto Integration Platform,” which makes it possible to merge cryptocurrencies with the legacy trading systems.

tZERO was founded in 2014, aiming to use blockchain technology as a way to change up Wall Street and the traditional financial market.

[Author Alert] The author’s opinions above are solely based on their own self-conducted research. Assume any and all authors are using, holding, trading and/or buying cryptoassets mentioned as a portion of his or her financial portfolio. Use information at your own risk, do you own research, never invest more than you are willing to lose.

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Author: Hank Klinger

Why is FINRA Lingering on Approval Requests for 40 Digital Assets Securities Startups?


Why Is FINRA Frustrating Approval Requests For 40 Digital Assets Securities Startups?

The current cryptocurrency and blockchain climate is pretty interesting. There’s so much happening right now that everyone naturally seems to want a piece of the pie. 2019 has been a good year bitcoin for example and there is a lot more recorded investment – both individual and institutional – than there used to be in times past. There’s the Binance incubation program and there’s also Ripple Labs both of whom are spending a lot of time and Resources to help nurture and grow many up-and-coming startups focusing cryptocurrency and blockchain technology.

However in all this excitement as many as 40 different startups seeking to trade tokenized securities have been stifled because they’ve been waiting for approval from U.S. authorities. According to reports, the Financial Industry Regulatory Authority (FINRA) which is a self-regulatory organisation (SRO), has been reluctant to approve more than a few startups for quite a while now. At the moment, there’s a lot of speculation but nobody is exactly sure why this is happening as some of these startups have been waiting for up to a year and some as long as 14 months.

Some people who are clearly unhappy with the state of things have opined that FINRA is doing this deliberately because they have placed a quiet and unofficial Embargo on the registration of some of these startups. There are also those who think that the reason for the hold-up is connected to the securities and exchange commission(SEC) believing that they are exploiting the fact the proper classification of some digital assets, especially as securities, haven’t been very straight forward. There are also others who think the FCC is directly making FINRA postpone all approvals until further notice.

However, as unpalatable as the situation is, not everyone is pessimistic. There are some who believe that the hold-up is a bit inevitable because this class of assets are relatively new and this has been corroborated by Ray Pellecchia, the director of Media relations for FINRA. Whatever the reason is, the affected startups are quite unhappy about the development.

According to Pellecchia:

“Membership applications from firms proposing to engage in digital asset businesses present new, complex issues and we are in the process of working through them.”

The Nascent Cryptocurrency Climate

Digital assets have been around for more than a few years now. However, especially when compared to other global financial markets, it still is relatively new. Some of the affected startups are looking for a way to become officially recognized broker-dealers so they can let the average customer join the cryptocurrency sphere using digital assets that are officially classified as securities. This is however not a walk in the park because before they can start, they have to submit to authorities for approval.

FINRA is one of the regulators these new firms must go through as one of its functions is to grant approvals to broker-dealers and also authorise official representatives. However, since FINRA is an SRO, it is still under the authority of the SEC.

FINRA Is also at the helm of affairs because before any firm can be qualified custodians or players in the alternative trading systems (ATS), it is compulsory that they must first be approved as broker-dealers.

Some cryptocurrency exchange firms are also interested in becoming qualified custodians so that they can serve as middlemen, keeping crypto assets for institutions who are unable to do this for themselves. Some exchanges that are authored as qualified custodians include Coinbase, Gemini and BitGo. With these three firms however, things were done a little differently as BitGo was authorized by the South Dakota division of banking while the New York Department of Financial Services was responsible for licensing both Coinbase and Gemini. FINRA was completely bypassed.

Is There Really An Unofficial Ban?

At the moment, it would seem that many people are sure that the hold-up might stem from deliberate actions against the rise of tokenized securities. A concerned attorney representing one of the affected firms has said that there have been a lot of conversations between FINRA and the SEC but it still doesn’t look like anything will happen soon. The attorney also said the SEC’s concern with manipulation and fraud in the cryptosphere is a big problem.

“On the one hand, you have the SEC complaining that there’s all this market manipulation and bad actors, but they won’t let good actors come in and clean things up.”

The lawyer also said that they don’t think there’s anything they haven’t tried.

“We’re at a stage where we’ve provided absolutely everything we can [and] they’re not requesting anything else from us. They’re just saying they can’t approve because they’re uncomfortable with this asset class.”

This situation has forced this particular client to consider continuing their business outside of the U.S as the attorney was quoted saying “…if we have to exclude U.S. citizens and U.S. companies and share our skills abroad, then that’s what we’ll do.”

This isn’t the first time the difficulty of regulations in the U.S has been pointed out. Last year, a Law and Technology Official at Consensys – Joyce Lai – specifically said that there would be a lot more related projects if the laws and regulations were a tad more lucid.

She has also said that:

“Regulatory clarification, or a lack thereof, is a huge hindrance that can weigh heavy on the minds (and potential purse strings) of founders.”

Is The SEC A Bigger Problem Than FINRA?

As stated earlier, no one is exactly sure what the problem is but many believe that even though FINRA might be a tough nut to crack, the major problem is the SEC itself. For the most part, the FINRA can conduct its business independently but the SEC is still legally allowed to override FINRA.

Even people who aren’t directly affected by the hold-up believe that the SEC is the problem. According to one of such persons:

“A lot of times FINRA are the people in the system that are slowing things down but in this case, what I’ve heard is that FINRA is waiting for clarity from the SEC so they can move some of these things forward and they’re actually being quite cooperative on working with people.”

Other Plausible Opinions

There are many who believe that the idea that there is some embargo is unlikely because there are a few firms who have successfully been approved by FINRA. These people think that the current problem might be attributed to the specific features of the digital assets submitted to FINRA.

Some of the Alternative Trading Systems (ATS) which received approval include OpenFinance, SharesPost, tZERO, and Templum Markets. These firms were approved last year causing a few people to believe that there is no real embargo.

No Resolve Anytime Soon

Even with all the complaints, it’s still very unlikely that the problem will see a resolution any time soon. One of the arguments in support of FINRA is that its responsibility, before it gives any approval, requires that it does a thorough scrutiny of all the firms including the owners and management, its proposed client base, its experience in the sector, financing and how it intends to source for funds and also what funds it currently has.

Because these things involve cryptocurrency and an audience that is on the internet (which means there can’t really be any fixed description), it might not be surprising that the process is taking a lot of time.

Under normal circumstances, FINRA has a deadline for either approval or disapproval which is six months. However, FINRA is still legally allowed to lengthen this deadline if it needs to.

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Author: Tolu