Category Archives: ICO

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Malta Makes Huge ICO Funding Gains as Crypto Investment Funds Rise in 2018

New crypto funds are continuing to open despite a falling market and apprehension over ETF decisions, according to the latest analysis from Crypto Fund Research.

With things seeming to go well for crypto funds, collectively amassing $7.1 billion, they still lag behind traditional hedge funds, with most of the institutional investment managers playing a wait and see scenario. Cryptocurrencies’ next big hurdle, now that digital currencies are very much out there in the financial sector, is to start encouraging institutional investment on a larger scale.

It is thought that 2018 will see more crypto hedge funds arrive on the scene, which is on target to reach 165, nine more than in 2017. Statistics show that until July 31 of this year, there were 96 new crypto hedge funds and venture capital funds with more than half of those existing today being launched in the past 18 months.

There are currently 466 crypto funds across the globe with San Francisco, New York, Singapore and London topping the list for 2018 launches. In addition, Austin, Dallas, Hong Kong, Philadelphia, San Diego, Tokyo, and Zug are not far behind in terms of multiple launches of crypto hedge funds and capital ventures since January this year.

In terms of ICOs, launches have also accelerated this year to date, also seemingly undeterred by a bear market. However, 50 percent of all projects in 2018 have failed to raise more than £100,000. This low figure was put down to investors concerns about scams

Service tokens accounted for 42 percent of new ICOs, but utility tokens attracted the most funding at $22 million per project, followed by crypto tokens at an average of $7 million.

Another hurdle for new ICOs remains that problem of getting projects listed on exchanges, which has become an increasingly lengthy process. The number of projects that managed to get listed in the shortest possible time fell by 22 percent this year, due in part to tougher exchange requirements and new regulatory demands.

In overall terms, 2018 has been 10 times better than the previous year for ICOs, according to a market status report published by ETF on August 8, with more money being raised and more ICOs being launched in the second quarter of the year.

A notable fact coming out of the report is that small nations are winning in terms of making the largest gains, with Malta, Gibraltar, and Singapore coming out on top. Malta raised an average of £119 million, almost twice the funds raised by second on the list Gibraltar. Other statistics show that although it is clearly European nations that are making the largest gains in terms of overall fundraising, North America is still the crypto giant at $4.98 billion with 116 projects, a huge 65 percent of all the funding raised. Europe came in second at $1.12 billion, with Asia coming in third with $751 million.

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Australian Cricket Ex-Captain Michael Clarke “Given Out” by Tweeters After ICO Endorsement

Former Australian cricket captain Michael Clarke has put his name behind an ICO, causing a stir in the Twitter community.

Clarke has endorsed Brisbane-based crypto exchange Global Tech, who is looking to raise up to AUD 50 million (USD 36 million) in its upcoming ICO. Global Tech, which was founded a little over a year ago by Andrew Mclean and Marlon Donaire, describes itself as a platform which:

“…combines premium education, important industry updates and a social platform, which is sure to revolutionize the way we invest and live. Our mission is to develop, advance and modernize the industry, making it more accessible, transparent and forward-thinking.”

Exciting times ahead 👌🏻👍🏻https://t.co/kFey7jqCLF pic.twitter.com/iTW3NX28S0

— Michael Clarke (@MClarke23) August 8, 2018

Australian cricket is very much under the microscope at the moment, so it is unsurprising that the announcement that Clarke was involved with the ICO launched the usual negative Tweeting. The comments were spurred on by the recent ball-tampering scandal which involved yet another ex-captain of the national cricket team, Steve Smith, after sandpapering a ball in a test match in South Africa this year.

One such detractor was Bronte Capital founder John Hempton (also known to some for his appearance in an episode of the Netflix series Dirty Money). Hempton commented that Clarke was “squandering his reputation on an initial coin offering” adding:

“Whether Michael Clarke is breaking Australian law regarding advertising investments with this Tweet I will leave for ASIC and their lawyers to decide.”

ffs, ex Australian cricket captain in an ICO.

Suggest Mr Clarke you just buy sandpaper.

It will do less damage to your reputation… https://t.co/lyoHNxm1aS

— John_Hempton (@John_Hempton) August 8, 2018

The Global Tech founders admit that the sector does include scams and illegitimate companies but wants to address this issue with its own ICO arguing that there are still many “fantastic blockchain and cryptocurrency companies” in the industry. The company declares that:

“Andrew and Marlon propose to bring legitimacy back to the industry with a community and education-based trading and exchange platform. With their revolutionary vision and entrepreneurial ethos, they spent months tracking down the right people to create the perfect team, and make their vision a reality.”

Business crowdfunding has been an issue this year in Australia’s burgeoning crypto community. The corporate regulator, ASIC, has introduced measures to protect investors, along with the Australian Competition and Consumer Commission, sending some ICO plans back to the drawing board.

 

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Germany’s Biggest Ethereum Meetup Goes 100% Dapps

Germany’s biggest Ethereum meetup in Berlin has announced that is to cover the whole event using decentralized applications (Dapps).

The event ETHBerlin will use Dapps for all services including ticketing, live streaming, hotel booking and raffles.  The event will be held at Factory Berlin, which will be held in two venues from 7 September. One is in the central district of Berlin, Mitte. The other brand new Factory venue is in the middle of the city’s startup scene, Gorlitzer Park.

Currently, there are 1,565 Dapps built on the Ethereum blockchain alone, unsurprising given Ethereum’s historical place in the development of blockchain solutions. Carl Bennet of Status.im suggests that 2019 will become a new dawn for Dapps, suggesting:

“We will see more developers and designers focusing on creating simpler and more familiar user onboarding experiences for mainstream use we’ve come to expect from the applications we use and an overall lower barrier to entry into the crypto ecosystem.”

The suggestion is that Dapps will be the key to widespread crypto adoption, beyond the payments system created by Bitcoin, offering users the ability to interact with cryptocurrencies, while navigating user-friendly mobile and desktop applications, thus bringing digital currencies to the “forefront of social consciousness”.

For this event, ETHBerlin has elected to use an Ethereum-based video streaming app along with a decentralized hotel and apartment booking platform accepting Ether. Raffles, ticketing and event management will also be covered by Ethereum based Dapps. The ETHBerlin team suggests that it is “raising the bar” with Dapps, stating:

“ETHBerlin stands strong, we think that Dapps are the future, so we’ll do whatever it takes to push adoption, and inspire you to build more of them. There is room for all… As a responsible, global community, in constant evolution, as is our ecosystem, we need to understand that it is not enough to absorb these teachings and foundations and just replicate.”

Dapps are clearly on the march this year, mainly because of the influx of funding through ICO token sales enabling further development and testing of new ideas and applications. Within the Ethereum community, there is a general feeling the Dapps are the future replacing intermediary-based centralized systems.

Critics suggest that there are scalability issues, with some suggesting that the Ethereum protocol will need a massive scaling boost to support larger platforms demanding huge transactions.

 

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Increasing ICO Interest in Thailand as 50 Apply for Licenses

In Thailand, initial coin offerings (ICOs) may soon be finding their legal footing after approximately 50 ICO projects displayed interest in applying for licenses to operate.

Application progress

According to local media outlet The Bangkok Post, the Thai Securities and Exchange Commission (SEC) has seen a growing interest in those wishing to raise funds through the crowdfunding method. Although, according to the SEC secretary-general Rapee Sucharitakul, it remains yet to be seen as to how many of those will be given the operating license.

Furthermore, there are roughly twenty other companies who have made applications for the licenses to operate as cryptocurrency exchanges.

He said, “Licence approvals are being processed,” adding, “Many companies interested in opening digital asset exchanges have said digital assets and cryptocurrency trading in the Thai market are quite active.”

ICO portal

Before the SEC licenses these projects, “ICO portals” will be the first to be selected. The portals are essentially online ICO marketplaces, offering platforms for ICO issuers to operate their sales. According to Sucharitakul, three out of five companies who are seeking to operate as ICO portals have filed their applications already.

In early May, proposals for cryptocurrency tax and regulations were slowly coming to fruition. This came at a time when many international governments and financial regulators were also beginning to formalize appropriate crypto-laws and legislation.

Chief executive Thuntee Sukchotrat of digital asset exchange JIBEX said, “I believe that investors will invest in digital assets instead of stocks in the future. The performance of ICOs will rise in line with ICO project performance. The investment ratio of ICOs to stocks will be on par within two years.”

Recent months

In late May, the Thai SEC established that it would monitor ICO operations and cryptocurrency related businesses. Furthermore, a regulated SEC ICO Portal was further discussed, which would allow for domestic ICOs to be issued legally.

In June, the SEC made further inroads upon the announcement of its cryptocurrency laws, though there are only seven legal cryptocurrencies, which are Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, Stellar, and Ripple.

Shortly after, the SEC took five out of 50 ICO projects and announced they would be running them as pilots. Later on in August, Thailand reaffirmed its crypto-positive stance after the Bank of Thailand made it legal for local banks to issue digital tokens, provide crypto brokerage services, operate crypto-related businesses and invest in cryptocurrencies via subsidiaries.

 

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Philippine SEC Shares Draft ICO Regulations

The Philippine Securities and Exchange Commission (SEC) has released a report detailing the country’s proposed initial coin offering (ICO) regulatory guidelines.

The 37-page document released by the SEC reportedly comes after consultancy with several Philippine cryptocurrency companies, including Satoshi Citadel Industries and Coins.ph.

The proposed rules would require Philippines-based startups and corporations to file applications with the SEC detailing the function of the tokens and the business operations of the company. Prior to receiving the go-ahead to hold an ICO, companies would be required to submit an initial assessment request that follows the rules of the Commission within 90 days before the beginning of the token pre-sale.

The white paper, including an operations manual detailing the system’s structure, must also be submitted, alongside the evaluation of an independent legal counsel in evidence that the tokens do not meet the requirements necessary to be registered as securities with the SEC. The proposal goes so far as to request source codes and commands in attempts to expose potential scammers.

Further to receiving approval, advisers and members of the company holding the ICO are required to undergo police clearances to show they are of ”good repute“. The report offers nine instances that a team member could disqualify the ICO, including if they are found to have made any false statements regarding the project during the process, or if they have ever been convicted of offenses including embezzlement, misappropriation, or perjury.

To combat any illicit activities of investors in the ICO, know-your-customer and anti-money laundering policies would be required from all participants.

Similarly to the US, the Philippine SEC highlights the importance of registering tokens as securities should they fall within the legal definition. As stated by US SEC Chairman Jay Clayton, tokens fall under the definition of securities if there is a ”reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others“.

 

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ICOs Only Account for Less Than 2% of Securities Lawsuits

A report released by litigation consultancy firm Cornerstone Research indicates that initial coin offerings (ICOs) account for under 2% of securities class action lawsuits – just 12 of 750 cases.

ICOs are not the main offenders… are they even securities?

With the total number of securities lawsuits at levels unmatched since 1995, the report found cases involving ICOs hit just five in the latter part of 2017, and have reached seven in 2018 so far. There have been 111 suits filed in total since the start of the year. While cases filed against American companies are reported to be on the decline, there is a growing number opened against European and Asian companies, nearly double that seen in the last decade.

Whether ICOs even classify as securities is currently up for debate. Securities can be defined as financial assets that represent a proof of ownership in the stake of a company that has intrinsic monetary value, but some argue tokens and cryptocurrencies purchased during ICOs do not qualify under this definition. This disagreement has led many to question whether the US Securities and Exchange Commission (SEC) is even the correct entity to be investigating cases involving ICOs.

Despite much bad press regarding ICOs, several of these few cases opened against crypto-related companies found fault in their reluctance to file their tokens as securities, which is a legal requirement in the US.

In one instance, Ripple (XRP) is facing three separate lawsuits from investors who lost money when they sold the tokens on. The plaintiff in one of these cases argues the XRP classifies as a security because i) they must be purchased with money, ii) investors reasonably expect to profit from them due to Ripple’s own promotional efforts, and iii) the profits collected are determined by the company’s management decisions.

The Massachusetts branch of the SEC suspended five cryptocurrency companies offering ICOs in March this year because they had all failed to register their tokens as securities.

In February, SEC Chairman Jay Clayton declared that ICOs must meet securities regulations, ”end of story”, although in June the SEC voted that Ethereum did not meet the definition of a security. Ethereum and Ripple have fundamentally different structures and use-cases for them, but it indicates a more reasoned, practical approach may be taken by the SEC in the future.

 

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Russia Whitelists 50 Crypto Companies, but Rules Still on Hold

A register of 50 whitelisted companies has been compiled by the Russian Association of Cryptocurrencies and Blockchain, reports Bitcoin.com.

The list of companies, consisting of firms which are either approved and awaiting verification by the Russian regulators, includes cryptocurrency sectors from crypto mining to ICOs.

Russia is currently consumed with regulating the industry, in a turnaround which earlier this year had Vladimir Putin’s economic advisor, Sergei Glazev stating that cryptocurrency could be used to carry out “sensitive” state activities, such as avoiding sanctions imposed by foreign governments and private companies. A national crypto ruble was conceived and rejected.

Meanwhile, cryptocurrency regulation in Russia has been delayed, and president Putin recently suggested that people should treat cryptocurrency cautiously since it was not supported and that the Central Bank of the Russian Federation did not consider cryptocurrency a means of payment or a store of value.

Blockchain continues to receive support among researchers in the country. The government is actively looking at how blockchain may be used to improve the workability of its defence and information systems, along with NATO and the Pentagon.

RACIB has said that part of its plan is to track what it regards as unfair ICO projects after an estimated RUB 270 million (USD 4.3 million) had been lost to illegal cryptocurrency scams or scams. The idea of the register is to shortlist companies which the body can verify as bona fide operators.

A statement by RACIB said that the new register “…consists exclusively of organizations that have undergone voluntary verification of reliability” which was based on “financial sustainability, experience and business reputation, lack of judicial judgments, availability of licenses and certificates (if necessary), [and] no arrears of taxes and fees”.

Russia’s position on the regulation of cryptocurrencies and ICOs is still awaiting clarification although the first bill “On Digital Financial Assets” successfully passed its first reading in the Russian Duma in May.

 

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Malta Double Dips with World’s First “Convertible” ICO and New Blockchain Degree

Malta-based company Palladium is to launch the world’s first “initial convertible coin offering” (ICCO) with two partners including Bittrex, writes Cointelegraph.

An ICCO is a different concept to an ICO as in this case investors will have the option to convert their assets into company shares in the future. Palladium has stipulated a three-year wait until conversion.

Palladium has confirmed that it wishes to build an exchange in crypto-friendly Malta and will also seek acquisition of a controlling interest in a European bank using 85% of the funds raised from the ICCO along with “strategic investments in financial services and blockchain companies complementing Palladium’s business”. The rest will be used to build the new Maltese exchange.

The company has indicated that the ICCO will see a distribution of USD 150 million in tokens scheduled to begin on 25 July. Founder and co-chairman Paolo Catalfamo commented:

“We expect this project, which will create more than 100 job opportunities, to be a historic landmark and to bridge the gap between traditional financial services and cryptocurrencies.”

In other news from the country, the University of Malta has just announced that it will now offer a blockchain degree as part of civil servant training later this year.

The initiative which was announced last year and will have taken a year to implementation was partly due to criticism that the government hadn’t done enough to offer the young the necessary skills to join the burgeoning block train industry in the country.

This move reflects global trends in IT education around the world which are generally taking on board cryptocurrency and blockchain courses, the latest being the London School of Economics, one of the leading academic institutions for higher learning in the world.

This latest of courses by another well-established institution will cost GBP 1,800, (about USD 2,400) and offers 60 hours of study, after which graduates will become certified crypto academics.

 

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China Central Bank Vows to Crush Foreign ICOs Targeting Chinese Investors

At a meeting for the Internet Finance Rectification Working Group on 9 July 2018, the Vice Governor of the People’s Bank of China (PBoC), Pan Gongsheng, had harsh words for foreign initial coin offerings (ICOs) that are targeting Chinese investors. He said, “Any new financial product or phenomenon that is not authorized under the existing legal framework, we will crush them as soon as they dare to surface.”

China banned ICOs and trading cryptocurrency for Chinese yuan (CNY) in September 2017, causing almost all cryptocurrency companies to flee the country including top exchanges Binance, Huobi, and OKCoin. Hong Kong has become a haven for cryptocurrency activity since that time since it has an autonomous government that has decided on more favorable cryptocurrency regulations.

According to Pan, individuals and organizations that are now “running abroad” are still doing business with Chinese residents, which is illegal and prohibited. The Internet Finance Rectification Working Group is tasked with enforcing decisions of Chinese regulators. Clearly, they are being pushed by Pan to use their full power to combat investment in foreign ICOs.

It is unclear how the Working Group will crackdown on ICOs. Due to the decentralized nature of cryptocurrency, even if cryptocurrency is fully banned there is no way to stop Chinese residents from using it, including the use of cryptocurrency to invest in ICOs. It appears one tactic Chinese regulators are using is monitoring messaging apps like WeChat to spot cryptocurrency traders, and WeChat has limited the amount of money that can be sent through their payment service. Also, popular online forums like Zhishi Xingqiu have become an access point for ICOs to reach Chinese residents, and these are being monitored as well.

 

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French Regulators May Be Taking Next Step Towards Easing the Path for ICOs

The French government seems to be moving towards regulating ICOs in 2018, according to a recent Autorité des Marchés Financier (AMF) annual report, writes CoinGape.

According to AMF’s report,  ICOs are most definitely on the agenda for further regulatory framework as Robert Ophèle, President of the AMF indicated recently, suggesting that the government body will:

“…continue to reflect on changes in the regulatory framework in the face of new offers, in particular, the Initial Coin Offerings (ICO), and to promote at European level the French regulator’s approach to innovation.”

The AMF last published an update in February of this year with its analysis of the legal qualification of cryptocurrency derivatives, as well as ICO guidance resulting from a public consultation of the relevant actors on the French market, according to law firm Kramer Levin.

The AMF has now launched a program of research called UNICORN (Universal Node to ICO’s Research & Network) in order to give greater clarity to those involved and to better protect potential investors. The government body has also suggested that more academic research is necessary, although it has rather followed the direction of many governments globally of promoting awareness campaigns to point out the risks of Bitcoin to “unsuspecting” potential investors.

On a positive note, it appears that the AMF has accepted that ICOs may have a productive place within France’s financial structure in the not too distant future. Ophèle said:

“In parallel, considering that certain forms of ICO could in the future constitute an alternative mode of financing for a segment of the economy in connection with blockchain technology, the AMF has launched a program of support and research of ICOs.”

The French press is far more upbeat on the question of coin offerings, recently suggesting that France should become ‘la Capitale des ICO’. The recent AMF suggestions require that best practices should be clear and complied with, also that they could extend the scope of current regulations which treat ICOs as public offerings of securities. Another suggestion is to issue an ICO license based on the regulatory model.

In response to these suggestions, the AMF received 82 responses, most of which chose for the new regulation to be optional, with a specifically tailored framework.

 

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