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IEOs, ICOs, Whatever the Name, Regulation is the Issue

IEOs, ICOs, Whatever the Name, Regulation is the Issue (1)

With Initial Exchange Offerings (IEOs) gaining in popularity, industry experts have been suggesting that their uncertain regulatory status doesn’t necessarily mark an improvement as a way of generating new capital.

An IEO is conducted via a cryptocurrency exchange. Unlike Initial Coin Offerings (ICOs), an IEO is administered by a crypto exchange on behalf of the startup that seeks to raise funds with its newly issued tokens. ICOs raised nearly USD 30 billion over a period of three years until hitting a wall in 2018/2019 as the SEC cracked down on fraudulent activity and illegal offerings blighting the market.

Many analysts see IEOs as a way of sidestepping strict market regulation, but Peter Van Valkenburgh, director of research at advocacy group Coin Center in Washington, begs to disagree that there is any mileage in this argument. He suggests:

“I don’t expect IEOs to result in better outcomes… From a regulatory and legal standpoint, there’s not going to be much difference here… Calling it now an IEO is not going to change your obligation to the potential issuer of that token if the token fits the test for a security, which I think in many cases it will.”

Crypto advisory firm TokenMarket’s CEO Ransu Salovaara claims that whatever the method of raising capital, tokens still need to work as utility tokens in the long run. Cryptocurrency research firm InWara claimed that only 30% of IEOs launched this year had what it calls a “minimum viable product” at the sale with most offering simply a website and a white paper.

A recent InWara research report into IEOs found that many exchanges don’t screen new products launched on their platforms, often offering subjective evaluation:

“That’s the problem here: there is no standardized vetting process… And as long as exchanges have the freedom to decide where to draw the line, bad actors, and fraud crypto projects will always creep into the limelight.”

 

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Hamas Adopts New Detection Avoidance Tactics In Bitcoin Fundraiser

In a story being followed by Bitcoin News, further developments in Hamas attempts to raise fund via Bitcoin have resulted in the mechanism for receiving payments being changed.

Hamas have now switched to a system which requires a new digital wallet generated for each donation rather than donors sending Bitcoin to a single digital address, or wallet, in an attempt to cover their tracks.

Hamas, the de-facto ruling authority of the Gaza Strip in Palestine, is regarded by several countries, including the US and the EU, as a terrorist organization. Russia, Turkey, and China are among those major world powers who do not subscribe to the definition.

The original Hamas request for Bitcoin funds in February was made as a result of Israeli Prime Minister Benjamin Netanyahu’s decision to freeze millions of dollars in Qatari aid – including USD 15 million a month to pay the salaries of Hamas civil servants.

Since then, Hamas has been put on the back foot by both the US Government and Israeli intelligence since they broadcast their requests for Bitcoins. Although Hamas has made no comments about how they now access donors, Elliptic research claims that between 26 March and 16 April, BTC 0.6 — worth around USD 3,300 — was sent to the website-created wallets. Elliptic uses a database of information linking digital coin addresses to exchanges, darkweb marketplaces, and proscribed groups to track cryptocurrencies.

Clearly, Hamas has no concerns regarding their proscribed designation and until now have been suggesting to donors that they “use a public device so that the wallet is not linked to your IP address”, using step-by-step instructions in Arabic on how supporters can avoid fiat based systems and donate in Bitcoin.

 

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Malaysia to Build 835-Acre Blockchain City

Malaysia to Build 835-Acre Blockchain City

A new massive blockchain project called Melaka Straits City is planned for Malaysia with fundraising of USD 120 million needed in its initial stage.

The idea is to make the blockchain city not only functional for a range of business enterprises and educational services, but also a major tourist attraction with the Ministry of Tourism of China predicting that 3 million tourists could visit it every year.

The city will be built on over 835 acres off the coast of Malacca in a project backed by the government of China and construction and engineering company China Wuyi. The plan is to allocate 200 acres of the marine area or building chalets and water recreation facilities. Malacca, dubbed “The Historic State”, is a state in Malaysia located in the southern region of the Malay Peninsula, next to the Strait of Malacca.

The features that give its unofficial “blockchain City” tag include a 32-hectare spread of land including kindergartens, colleges, universities, and student dormitories. Melaka Straits City will primarily be promoted as an educational center along with the tourist and sustainable development elements, which are the brainchild of the current owners of the land SWT International Sdn Bhd.

Over different periods Malacca was colonized by the Portuguese, the Dutch, and the British, and in 2008 it was included in the UNESCO World Heritage Sites List. Melaka Straits City’s official spokesperson Lim Keng Kai says that the construction will be futuristic, but also with a nod to Malacca’s rich historical past pointing out:

“That is why we’ve planned to build a distinctive cultural street in the center of the city. It will be inspired by the styles of different colonial eras and is going to make tourists familiar with Malaysian traditions and history.”

It is important to note that the Malaysian government has a high level of awareness regarding the crypto sector. Malaysia is still adapting to the spread of cryptocurrency with recent regulations introduced aimed at bringing more transparency to the sector in order to increase the trust level of investors.

 

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Monte Carlo and Ibiza Venues for 2019 Hodl Rally

Monte Carlo and Ibiza Venues for 2019 Hodl Rally

It’s the season for ‘Blockchain Week’, with New York Consensus 2019 coming up and Paris 2019 just having drawn to a close, but one event to look out for and getting a plug in Paris last week, is the 2019 Hodl Rally, scheduled for June.

If this sounds more like it should be a top gear event or a follow up to Paris-Dakar, that is understandable. It was described in Paris last week as “1,800 miles. 7 nights. 6 parties. 2 conferences. 100 cars. 1 superyacht party. 1 poker tournament. A fashion show. A charity gala.” Fair enough it’s a blockchain event… and its sounds pretty impressive, for those into Cannonball Runs. The Hodl Rally site tells its readers what they can expect:

We will be combining Blockchain conferences with parties, dinners, fashion show, yacht parties, club takeovers, poker tournaments, beach parties, beautiful models and lots of supercars. We will be driving across the most beautiful and diverse scenic continent; Europe, 8 cities in 8 days with a stopover in each city.”

Follow that with a 3-day visit to Barcelona for the World Crypto Convention, then a closing party at club Ibiza, and it’s starting to look like an interesting week.

It comes at a price at USD 3,897 per person, and some might argue such events are a bit of left-over from when partygoers danced till dawn with no concerns where the next Bitcoin was coming from, although to be fair a third floating blockchain conference is planned for September of this year. That one is using an entire ship reserved for a potential 2,500 cryptocurrency enthusiasts sailing the Mediterranean Sea. The cruise is organized by cryptocurrency exchange CoinsBank taking in Barcelona, Monte Carlo and Ibiza as 100 speakers deliver presentations on current developments in the industry.

Virtue Nightingale, the organizer of the Hodl Rally set for 3oth June, says the glam is absolutely not over the top, quick to point out the Gumball 3000 costs around USD 65,000 for a ticket, and the Hodl Rally has already sold 30 tickets, mostly to crypto and blockchain enthusiasts. He pointed out:

“It brings people from different walks of life altogether as one community, participating in this event and then what you do is you take that time, that opportunity to educate and inspire people about the importance of blockchain in their day-to-day lives.”

 

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VC Tim Draper Eyeballs Facebook Coin Project as Possible Investment

facebook coin

Tim Draper, Draper Associates venture capitalist and crypto pundit, is reported to be meeting with Facebook in order to determine if his company should invest in Facebook Coin – a stablecoin project being considered by the social media giant.

The idea behind Facebook Coin is to allow FB users to conduct transactions using a cryptocurrency pegged to the US dollar in tandem with WhatsApp.

Draper is certainly not shy when it comes to investments, and knows a good deal when he sees one, having invested in Telsa. Inc, Hotmail, and Skype before discovering Bitcoin in 2014 into which he invested USD 89.1 million. Since then he has become an outspoken advocate of the flagship cryptocurrency, talking up its price at every opportunity.

It’s thought that Facebook needs USD 1 Billion in venture capital to get its plans for the stablecoin project moving. The company taking more than a passing interest in the crypto space over past months hired PayPal president David Marcus to head its blockchain team. A cryptocurrency could be a massive boon to the company’s already well-heeled status claims Barclays’ analyst Ross Sandler:

“Any attempt to build out revenue streams outside of advertising, especially those that don’t abuse user privacy are likely to be well-received by Facebook’s shareholders.”

Sandler sees a potential USD 19 billion being added to Facebook’s annual revenue. Draper’s role in such a project could be quite influential given his track record, and his predictions for Bitcoin, in particular, show great faith in the future of cryptocurrencies as a concept.

Draper who’s been consistent in his prediction that Bitcoin prices would hit USD 250,000 by 2022 has views on crypto’s future that would give Facebook, with all its engineering prowess, great heart. Talking of Bitcoin’s future, Draper maintains that crypto as a vital part of the financial system will become a reality, becoming bigger than the internet.

“My reasoning is that all these engineers have to create all the things they are doing to make it really easy for us to spend it and to use it and to move it and to build it into our contracts and all of that.” He adds, “This affects the entire world and it’s going to be affected in a faster and more prevalent way than you ever imagined.”

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Insurtech Lemonade Valued $2 Billion After $300 Million Injection

Insurtech Lemonade Valued  Billion After 0 Million Injection

Fintech insurer and insurance tech (insurtech) firm Lemonade yesterday raised a fresh funding injection worth USD 300 million in a deal led by SoftBank Group. Although the company did not reveal its valuation, sources said to Forbes that this fresh investment now means that this Washington-based unicorn is now worth more than USD 2 billion.

Having previously raised in December 2017, a year after it launched, this latest round sees it flush with USD 480 million in investment, with backers this round including Allianz, General Catalyst, GV, OurCrowd and Thrive Capital.

Lemonade provides insurance to renters and homeowners and its success has seen it getting mentions in last year’s list of 2018 Next Billion-Dollar Startups. Renters are able to purchase insurance as cheaply as USD 5 while homeowners could buy protection from as low as USD 25.

With a platform on mobile and and web, the company has been looking into an expansion into other US states as well as across the pond to Europe. With offices in New York and Tel Aviv, CEO Daniel Schreiber said that a European headquarters was already set up in Amsterdam. He said:

“We’re not looking to create a small technology vendor or something else in this space. We are looking to create a dominant and technologically enabled insurance company on a global basis.”

Lemonade’s name in insurtech was made on its unique business model of using AI to issue policies and pay claims in minutes, eliminating conflict of interest between insurer and insured. It boasts some 300,000 customers and did USD 57 million in sales last year.

 

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Blockchain-Based InsurTech Gains Traction

Blockchain-Based InsurTech Gains Traction

More insurers are joining the cryptocurrency industry through blockchain-based insurtech startup B3i in an ongoing funding round, according to news outlet Tokenpost.

B3i started out as a consortium of five insurers and reinsurers to include Aegon, Allianz, Munich Re, Swiss Re, and Zurich, established to create value for the re/insurance industry through distributed ledger technology. In its latest funding round, it added three new insurers and reinsurers, thereby expanding its shareholders to 16, which includes some of the top insurance companies from across Europe, the Americas, and Asia.

Chairman of B3i and Group head of business transformation at Zurich Insurance Company Ltd, Antony Elliot said B3i community and network spans over 40 companies who represent “over half of the world’s reinsurance premium and major primary insurers”, thereby showing a significant interest from the insurance world.

The company seems to be living up to its expectation of building a community of shareholders who will drive value in the blockchain-insurance niche. “Following incorporation, B3i will grow its community of shareholders, partners, and customers and create an ecosystem of products and services developed by the market, for the market”, according to its website.

The company continues to experience funding success following its USD 6.35 million raise in March 2018 after its incorporation. As the consortium targets Q4 for the release of their product, it plans to grow the community even further. Overall, the company seemed pleased with the achievements so far, as Antony expressed:

“We are pleased to have strong ongoing financial and strategic support from the insurance industry. the company looks forward to addressing critical industry needs.”

Blockchain-based insurance has been identified as one of the five major tech trends that will reshape the insurance industry, as an EY report finds that:

“FinTech and InsurTechs have made significant inroads by designing powerful but focused applications that solve specific problems and deliver high-quality and intuitive digital experiences.”

As insurtech and blockchain threaten legacy insurance systems, “tomorrow’s insurance leaders must prepare for the adoption of blockchain and big data…”, the report suggested.

In December last year, US-based insurance company State Farm began a blockchain trial to settle insurance related cases aimed at streamlining the manual process of subrogation. Also, in Zimbabwe, an official of the Insurance and Pensions Commission (IPEC) recommended blockchain technology as an industry solution to failing insurance companies.

Bitcoin News recently reported how ignorance is one of the major hindrances to blockchain and cryptocurrency-related insurance adoption, and further heightened by the level of risk exposure in the industry, only a few insurers are willing to provide their services to crypto-related businesses. Further, a value in flight is expected to be a focal point for companies willing to adopt insurance, as other aspects may prove useful in the long run.

However, the increasing involvement from insurance companies seems to be encouraging. Perhaps this alongside other blockchain driven insurance startups may change the scape of insurance in the emerging digital asset class and its underpinning technology.

 

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Japanese Crypto Unicorn Tops $1 Billion Valuation

Japanese Crypto Unicorn Tops  Billion Valuation

Unicorns — the term given to a startup which achieves a valuation of over a USD 1 billion — are rare in Japan but this week has seen the birth of another as Liquid Group Inc joined the exclusive club.

The Tokyo-based crypto startup made the announcement on Wednesday that it had reached the magic USD 1 billion valuation, securing funds from investors including venture fund IDG Capital and crypto mining giant Bitmain Technologies Ltd.

How it has achieved this aggressive valuation is not totally clear, and as yet Liquid hasn’t indicated how much money it has raised to date, but indications are it may have commitments of about USD 50 million in its ongoing C round. Initially, co-founders Mike Kayamori and Mario Gomez Lozada raised over USD 20 million in prior rounds from investors including Jafco Co and also raised a further USD 100 million through an ICO in 2017.

However, Liquid has got history with teeth, having been able to successfully hook a crypto exchange license from Japan’s regulator, the Financial Services Agency. It also handles over a USD 50 billion cumulative trading volume and has also received anchor investment from IDG a Chinese-owned, American-based media, data and marketing services and venture capital organization — a company which has also funded Coinbase and Bitmain. Jihan Wu, the co-founder of Bitmain sees the new funds as enabling Liquid to be more competitive at an international level:

“Japan is one of the leading nations in putting [the] crypto industry under proper regulations, and Liquid Group has proven itself to be the exemplary player within such compliant rules. This is a very important and unique moat amid global competition.”

Past aggressive valuations at startup include Coinbase which raised USD 100 million in 2017 at a valuation of USD 1.6 billion and mobile payments and crypto trading platform Circle which raised USD 110 million with a massive valuation of USD 3 billion. As of January of this year, Japan was home to just one unicorn, Preferred Networks Inc, compared to 165 in the US.

 

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New Report Confirms Terrorists Still Prefer Cash to Crypto

New Report Confirms Terrorists Still Prefer Cash to Crypto

A new report confirms that that terrorist activities continue to be backed by cash rather than cryptocurrencies, which don’t afford such groups the anonymity they seek.

It is a fact that has been known for some time, despite many government departments in jurisdictions around the world citing cryptocurrency links to terrorism, a connection well disproven over time. A 72-page long report published by Europol late last year confirmed conventional banking as the primary source of terrorist funding such as the recent attacks on European cities.

Europol, based in The Hague, the Netherlands, supports the 28 EU Member States in their fight against terrorism, cybercrime and other serious and organized forms of crime. They also work with many non-EU partner states and international organizations.

Now, a newly release Rand Corporation report reconfirms that cryptocurrency is ineffective as a source of funding for terrorist groups. Cash is seen as being far more suited to the transfer of large sums for such activities, mainly due to the increasing degree of legalization and regulation surrounding the cryptocurrency space, which is seen by many from within the industry as a good thing.

The latest report, eclipsing Europol’s 2018 report by 27 pages, focuses primarily on the receipt, management, and spending of funds for terrorist activity. The report maintains that the only one of these areas in which cryptocurrency might have some effectiveness in the first, as receiving funds has been made simple by using digital assets due to its global nature and ease of distribution.

This is counteracted by the fact large sums cannot easily be managed and certainly hit problems when it comes to spending cryptocurrency anonymously due to the current industry infrastructure. The report maintains:

“We see little current evidence of the adoption of cryptocurrencies by terrorist organizations or the motivation to do so, but that very well might change as countermeasures shut off funding and as the cryptocurrency technology changes.”

The report suggests the terrorist needs are not supported by current cryptocurrency systems such as affording the anonymity to buy arms, purchase property and pay for propaganda. These key areas vitally important to terrorist cells require hard cash.

However, the Rand report does add one note of concern for the future suggesting that situation might change with the potential emergence of a single cryptocurrency “that provides widespread adoption, better anonymity, improved security, and that is subject to lax or inconsistent regulation”.

 

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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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