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SEC Tells ETFs to Drop Blockchain Tag

SEC Tells ETFs to Drop Blockchain Tag

The US Securities and Exchange Commission (SEC) is once more flexing its regulatory might, this time by warning fund providers offering so-called blockchain exchange-traded funds (ETFs) to lose their “blockchain” tags in their names.

The move is seen as a preventive measure to avoid misleading investors keen on gaining asset exposure to cryptocurrencies and their underlying blockchain technology. Bloomberg reports that the SEC is raising more questions as blockchain-themed fund names are proliferating. Due to the increased scrutiny, there is a growing number of ETFs who are changing their names before their funds even begin trading. In 2018 alone, every third fund changed their names during the SEC approval process, with one fund removing “blockchain” and replacing it with “transformational data sharing”.

CEO of fund provider Exchange Traded Concepts, J Garrett Stevens, said that the SEC enquiries are obviously on the rise:

“We get questions more than we used to where we have to be able to defend our name. Now almost all names, they’ll come back and say ‘Can you justify, give us your explanation on why this name is OK?’”

With more than 2,000 competing funds, thematic names have been an area for providers to differentiate in the USD 3.9 million ETF market that is already showing some signs of stress, according to Bloomberg.

Under the 80-year old Investment Company Act of 1940, issuers are forbidden to use names that are “materially deceptive or misleading”. The SEC adopted Rule 35d-1 in 2001, the Names Rule, to further define this. Funds must also ensure that 80% of their assets are in the same category of investments represented by their names.

 

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London Stock Exchange Lists Blockchain ‘Token’ Shares in a First for the City

London Stock Exchange Lists Blockchain ‘Token’ Shares In A First For The City

The London Stock Exchange has heralded in a new era by the first issuing of shares using blockchain tokens.

The move is seen by the city as bringing cryptocurrency by proxy as into regulated financial markets due to blockchain’s role as a driver for digital currencies. The company selling the tokenized shares, fintech company 2030, sold GBP 3 million (USD 3.9 million) worth of shares in a first for the city’s financial Mecca.

Earlier this year the London Stock Exchange indicated its growing interest in blockchain and cryptocurrencies when it hooked a deal with Hong Kong-based global fintech company, ATOM Group (ATOM) in order to enable its AXX Digital asset exchange to be able to use LSE tech. Head of LSEG’s global sales and marketing, Lorne Chambers, commented than traditional tech expertise was much sought after by crypto firms and the LSE was well placed to market it.

Earlier this month the LSEG listed the Invesco Elwood Global Blockchain ETF and recently invested in London-based cryptocurrency startup Nivaura, leading a GBP 15 million (USD 20 million) funding round.

The prestigious UK exchange’s recent movements indicate a growing interest in blockchain and cryptocurrencies from mainstream finance, although many city analysts continue to maintain a suspicious stance on all things crypto.

As of April 2018, the London Stock Exchange (LSEG) had a market capitalization of USD 4.59 trillion. It was founded in 1571, making it one of the oldest exchanges in the world.

 

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‘Regulatory Refugee’ Blames SEC for Crypto Winter

'Regulatory Refugee' Blames SEC for Crypto Winter

Pillar founder David Siegel has targeted much of the blame on the United States Securities and Exchange Commission (SEC) for the flagging performance of the cryptocurrency sector over the past year.

Siegel dubs himself the world’s first web designer, is the author of five books on the web and business, and has started 23 companies, including Studio Verso based in London, one of the world’s first digital agencies. He calls himself a “regulatory refugee from the United States”, a fairly clear indication on his views on US government regulation.

His frustration comes from the way in which he perceives that innovation in the industry has been largely stifled by both the SEC and what he calls the government’s “self-fulfilling prophecy… that crypto would be bad for investors”, in turn making it “very bad for investors”.

Innovation is the key to industry’s success, Siegel urges, but sees the SEC stifling it through a lack of support for new entrepreneurs and developers coming through. He sees the US becoming left behind as other nations become willing to take on talent which struggles to find a place there To illustrate this, he argues that he can get far more achieved in the UK and Europe than he can in the US.

Siegel found his own way of dealing regulatory hurdles by not listing on exchanges and sees the industry as a whole gaining in strength, despite ICO fundraising fast becoming a thing of the past, with the proviso that the SEC change their approach to open source projects and cryptocurrency regulating. Regarding his company’s future, he has a positive note:

“We’re finally hitting our stride. We’ve launched several new features in the past few weeks, we are getting strong attention from the Ethereum and open-source blockchain communities, and we are collaborating with more industry players. We’re starting to realize the dream of our ICO, so it’s very exciting. I think we’ll be one of the few ICO projects that becomes part of the blockchain ecosystem.”

The SEC is set to launch its second public forum on cryptocurrency and blockchain on 31 May.

 

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Gold-Backed Crypto Could Be On the Way in 2019

Gold-Backed Crypto Could Be On the Way in 2019

One New York-based firm already offering a stablecoin is taking the next step by looking at the feasibility of a gold- backed digital token this year.

Having launched Paxos Standard stablecoin in 2018 Paxos is now keen to offer “any type of asset and put it into a blockchain.” According to the company’s CEO Chad Cascarilla, a new kind of offering could be simple. “How you do it with a gold token is how much gold you have in a vault equals how many gold tokens outstanding,” he argues. This could be up and running by 2019, the Paxos CEO is suggesting.

Although any commodities could be feasibly be put on the blockchain, Cascarilla suggests that “gold is probably the most obvious.” Having become the first virtual currency company to be licensed in New York, his company could be the first to potentially become the forerunner of enabling stock trading on the blockchain if these plans come to fruition.

One hurdle to tying cryptocurrencies to traditional securities remains the U.S. Securities and Exchange Commission (SEC) currently swamped by ETF applications, knocked back by the recent government shut down. Paxos is still awaiting a response to their application to proceed with a gold-backed digital token.

The tokenization of precious metals could revolutionize asset lending given for example the logistical complications dividing gold and its transportation. Cascarilla suggests that tokenization kills two birds with one stone:

“Having it sit in a vault but also having it be on a blockchain kind of bridges those two worlds,” he added.

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Chinese Billionaire Claims Bitcoin Patience Will Reap Rewards

Chinese Billionaire Claims Bitcoin Patience Will Reap Rewards

As the much-discussed intuitional investment, hailed as cryptocurrencies jumpstart to a new crypto era, still awaits, a Chinese Bitcoin billionaire calls for patience.

Zhao Dong, one of the world’s largest over-the-counter traders of Bitcoin, made the plea to the industry suggesting that it could be well into the year before the market gets the boost it needs. The entrepreneur was talking on a WeChat group called “The Public Chain Alliance Crossing The Bulls And Bears Elite Team”, when he made the call for patience.

Zhao, another advocate of a USD 50,000 Bitcoin by 2021 not so long ago, said the “only thing you need is patience”, referring to a large investor surge into the market. He said that those who believed in the future of Bitcoin should hold “as much as possible when nobody cares”. He said also:

“In the bull market, I don’t persuade people to buy bitcoin, because it seems easy to make quick money but in fact, it is not. Now [in the bear market], I start to talk people into buying bitcoin.”

Zhao certainly is not alone, with other high flyers in the industry talking up the flagship cryptocurrency this year, with just Twitter’s CEO Jack Dorsey recently predicting that Bitcoin was to become the internet’s first “native currency”.

As Bitcoin investors and traders wait for the highly-anticipated Bakkt bitcoin platform and a US Bitcoin exchange-traded fund to boost the price, Mike Novogratz predicts Bitcoin is on the recovery after a bubble burst and that it is in a period of “handing off ownership from the people’s revolution“.

 

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Binance: ETFs Not Core to Crypto Growth

ETFs Are Not Core to Crypto Industry’s Growth, Binance CEO Weighs In

A popular trend as the cryptocurrency industry develops is the introduction of the analogous derivative instruments of the traditional financial market, aimed at luring in institutional investors into the crypto world. One such instrument is the exchange-traded fund (ETF).

CEO of leading cryptocurrency exchange Binance, Changpeng Zhao, has, however, downplayed the role of ETFs in the growth of the crypto industry. He said: “If it [a Bitcoin ETF] is listed on a big traditional exchange… that does bring in a lot of attention from people outside our industry.”

In a live stream via Periscope on 6 February, Zhao attempted to draw the attention of crypto enthusiasts to a very important piece in blockchain development – entrepreneurs building real, and usable products.

Blame it on the bear

The bear market which started at the cusp of the last all-time high of Bitcoin hasn’t made it easy for crypto projects. Many startups last year faced developmental challenges and were either forced to abandon their projects or get absorbed by another. Now, lots of players in the industry have become highly dependent on these market derivatives being introduced.

First, it was Bitcoin futures introduced by CME Group and CBOE in late 2017, which helped drive the price of Bitcoin to a new high of USD 20,000. However, it didn’t last long. Suffice to say, it was an opportunistic glitch in the price dynamics of Bitcoin.

Secondly, speculations about another bull-run propelled by ETFs run deep in the crypto community. Perhaps similar trends are bound to occur with more derivatives being introduced into the sphere, however, without an established value-based blockchain ecosystem in place, the market could get dire once more.

ETFs or no ETFs

As of the time of writing, the US securities regulator, Securities Exchange Commission (SEC) has rejected nine ETF applications. Each was laden with similar bull run expectations from the members of the crypto community as many have speculated on the prices increase should the SEC give the green light.

Recently,CBOE, along with investment firm VanEck and financial services company SolidX, reapplied for a rule change to list Bitcoin ETFs after withdrawing it a week earlier.

With the ongoing fuss about Bitcoin ETFs, Zhao seems to think that with or without the ETFs, the industry will grow. A sentiment probably sparsely shared as focus on the real development of blockchain and its applications are fairly the driving motif for latter blockchain adopters.

Other derivatives are coming

Bitcoin News recently reported a new class of derivative instrument being introduced by US-regulated derivative platform LedgerX, which is essentially a binary wager on the next Bitcoin’s block-reward halving.

While derivatives may be an economic milestone for the crypto industry, the overall utility of blockchain applications and their gradual adoption by legacy systems adequately offset the economic benefits of derivate crypto markets.

 

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Shrewdness in VanEck’s Bitcoin ETF Withdrawal?

Shrewdness in VanEck's Bitcoin ETF Withdrawal?

Investment management firm VanEck‘s withdrawal of its Bitcoin exchange-traded fund (ETF) application from the Securities and Exchange Commission (SEC) last week, allowing it to trade on the CBOE, may have been a good move according to some analysts.

As the industry still awaits the launch of a regulated Bitcoin ETF, VanEck’s withdrawal raised some eyebrows. The firm suggested that the government shutdown was looking to become a lengthy imposition on SEC activities being completed, although President Trump has since called a temporary halt to his plans for the construction of a Mexican wall. CEO Jan Van Eck explained that he had already been already in discussions with the SEC at the time he decided to withdraw the application, commenting, “…instead of trying to slip through or something, we just had the application pulled and we will re-file and re-engage in the discussions when the SEC gets going again.”

However, Jake Chervinsky, a securities laws expert in the US government, suggests that there was another strategy involved in the timing of the withdrawal; one that in the long term could result in VanEcks application being successful. Chervinsky believes that fear of rejection and subsequent bad PR for the company, as a result, was the more likely reason for VanEck pulling the application when it did.

Angling that PR-wise, a delay is always better than a rejection, Chervinsky feels that the firm must have realized how it couldn’t convince the regulator before the deadline, a view also shared by eToro’s senior analyst Mati Greenspan who argued:

“This proposal had a very slim chance of success… SEC Chairman Jay Clayton has been stressing that the Bitcoin market is not yet mature enough for an ETF.”

Greenspan goes on to argues that the VanEck temporary withdrawal was actually good for the market and shows by the muted industry response at the time that the cryptocurrency market is no longer “dependent on any government or financial institution and no single product or service has the power to make or break Bitcoin”.

 

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CBOE Scraps Bitcoin ETF Application

CBOE Scraps ETF Application For Now

The cryptocurrency community will have to wait a little longer for the first hotly-anticipated Bitcoin exchange-traded fund ETF as CBOE has officially withdrawn its application, albeit temporarily.

The US Securities and Exchange Commission (SEC) published a document on 23 January detailing the withdrawal from CBOE of the VanEck SolidX Bitcoin Trust application.

The ongoing US government shutdown, which has now surpassed the longest of its kind in history, is being attributed as the primary reason for the application being withdrawn. Working to a February deadline, it seemed very unlikely there would be enough staff at the SEC to process the application in time. It appears most likely that CBOE has chosen to refile the application in the future rather than suffer the repercussions associated with failing to gain approval by the deadline.

Bitcoin has not experienced any significant losses since the announcement and has managed to hold above USD 3,500.

VanEck was considered by many analysts to be the industry’s leading for hope for receiving ETF approval, with CBOE being the first firm to receive the SEC’s approval for Bitcoin futures trading.

Writing on Twitter, VanEck CEO Gabor Gurbacts assured spectators the ETF application had only been “temporarily withdrawn”.

The Bitcoin ETF filing has been temporarily withdrawn. We are actively working with regulators and major market participants to build appropriate market structure frameworks for a Bitcoin ETF and digital assets in general. Will keep you updated. pic.twitter.com/o9yiN47ZKe

— Gabor Gurbacs (@gaborgurbacs) January 23, 2019

 

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Trump’s Shutdown Puts Sec on Hold, ETF Delays Expected

Trump's Shutdown Puts SEC On Hold, ETF Delays Expected

President Trump’s shutdown of government services has affected the Securities and Exchange Commission, giving rise to concerns about the completion of current ETF filings in progress.

Since the commencement of the government shutdown, due to the inability of Congress to overcome irreconcilable differences for the funding of a southern border wall with Mexico, the SEC has revealed it had just 285 members out of 4,436 employees working, some who are responsible for investor protection and market integrity.

Those submitting ETFs have expressed concerns that their submissions may be delayed as a result of the staff shortages. A statement from the SEC has done little to allay these fears which confirmed that:

“The SEC has experienced a lapse in appropriations. Absent an appropriation, the staff of the Commission is prohibited from performing the ongoing, regular functions of government except in very limited circumstances.”

The statement went on to confirm that regular duties involving the Securities Act of 1933, Securities Exchange Act of 1934, Investment Advisers Act of 1940 and Investment Company Act of 1940 would also be affected by the shutdown.

Jake Chervinsky, a lawyer with Kobre & Kim disagrees that if the SEC misses its deadlines the ETFs should be automatically approved, so the risk of delays is unlikely, suggesting “In reality, that won’t happen. The SEC will handle it one way or another: a one-page denial, a request for withdrawal, or something else.”

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Wall Street, Institutional Investors Prime for Next Crypto Bull Run

Wall Street, Institutional Investors Prime for Next Crypto Bull Run

Analysts are looking ahead to the potential for a sustained bull run on cryptocurrency markets in 2019, and many are expressing an expectation this will be the signal for Wall Street and institutions to up investment.

Many see large-scale investment being re-examined in 2019 after being scared off by Bitcoin’s December dip. Wall Street notably stood back prior to the end of the year with Goldman Sachs’ much-publicized plans to open a crypto trading desk called “top-of-the-market-hype thinking” by one New York executive.

Travis Scher of New York’s venture capital firm Digital Currency Group sees a change in indirection from Wall Street and large investment as imminent suggesting that Wall St has lagged behind. He has been watching the industry, choosing to remain on the fringes waiting for signs of an upturn before making a move.

Canadian entrepreneur and activist Jeff Berwick (aka Dollar Vigilante) sees 2019 as the year that cryptocurrency prices will take off once institutions finally make their move. He suggests that trillions of dollars are waiting to be invested in the cryptocurrency market.

Despite Bakkt’s delay, the recent seed funding of over USD 182 million goes on to show that a lot of institution key players are supportive of a successful launch of the platform, after particularly after the New York-based platform acquired “certain assets” and employees of Rosenthal Collins Group (RCG) to expand the company.

With Nasdaq also waiting in the wings and the potential for non-fungible tokens (NFTs) and ETFs predicted to push blockchain adoption and kickstart a crypto bull run, 2019 already offers high expectations for both analysts and investors.

 

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