The U.S. Securities and Exchange Commission (SEC) has announced the launch of the Strategic Hub for Innovation and Financial Technology (FinHub) to promote public engagement on fintech-related issues and initiatives, including blockchain technology and cryptocurrencies.SEC Launches FinHub Portal in Connection with the Issuance of Its DAO ReportFinHub, which replaces several internal working groups at the SEC, includes other areas involving the financial markets sector, including automated investment advice, digital marketplace financing, and artificial intelligence and machine learning.Acting as a portal for industry and the public, FinHub will publicize information regarding the agency’s initiatives and create a forum focusing on blockchain and digital assets, according to a press release.To be led by Valerie A. Szczepanik, senior advisor for digital assets and innovation and associate director in the SEC’s division of corporation finance, FinHub will also serve as liaison to other domestic and international regulators regarding cryptocurrencies and other issues, according to the entity chaired by Jay Clayton.“The SEC is committed to working with investors and market participants on new approaches to capital formation, market structure, and financial services, with an eye toward enhancing, and in no way reducing, investor protection,” he added. “The FinHub provides a central point of focus for our efforts to monitor and engage on innovations in the securities markets that hold promise, but which also require a flexible, prompt regulatory response to execute our mission.”The new SEC portal, FinHub, was established in connection with the issuance of DAO Report on July 25, 2017. The document defined ICO tokens as securities, which caused great concern for many players in the crypto space as they prepared to launch their own initial coin offerings. The SEC has also made it clear that the token sales during the ICOs don’t qualify as crowdfunding.“SEC staff across the agency have been engaged for some time in efforts to understand emerging technologies, communicate the agency’s stance on new issues, and facilitate beneficial innovations in the securities industry. By launching FinHub, we hope to provide a clear path for entrepreneurs, developers, and their advisers to engage with SEC staff, seek input, and test ideas”, said Szczepanik.The portal invites public input on matters such as fund innovation and crypto holdings, blockchain applications, and the listing of of VanEck SolidX Bitcoin Trust shares. The financial watchdog has been conservative regarding the entry of Bitcoin ETF applications.By August, the SEC denied nine applications from ProShares, Direxion, and GraniteShares via three recently published documents.Featured image from Shutterstock.
tZero announced it has issued its preferred tZero security tokens, sold during the Security Token Offering (STO) earlier this year. The company raised $134 million from investors worldwide during the months-long STO.
ICO to STO
The offering launched as a more typical pre-sale ICO towards the end of last year. This became the second stage STO in March, after review by the Securities and Exchange Commission (SEC). tZero raised $134 million from investors worldwide over the duration of the sale.
Investors with a signed agreement for future equity (SAFE) at the August 2018 close date had tokens issued last Friday.
Although tZero deployed the token contract and created the tokens, holders cannot access them until January 10, 2019. To comply with securities regulations, they must remain in a custodial wallet for 90 days after issuance.
After this period, holders and other accredited investors will be able to trade them on a platform tZero is currently developing. Non-accredited investors can join the party by August 6, 2019, through an approved trading platform. tZero also plans to register the securities to allow secondary trading on international exchanges.
In the press release for the announcement, tZero executive chairman, Patrick M. Byrne, compares the companies achievements to those of histories brave experimental test-pilots.
The issuance of the world’s first public cryptosecurity, OSTKP, in 2016 was tZERO’s Chuck Yeager moment: we broke the speed of sound by introducing the concept of real-time trade settlement. Today marks our Yuri Gagarin moment, where we leave behind the confines of the known world of traditional capital markets and take the first steps towards a new market powered by blockchain.
That’s quite some hyperbole for the world of crypto-securities.
Overstock’s Love Affair With Bitcoin
tZero is a majority-owned subsidiary of Utah-based retailer Overstock. Overstock is a long-time champion of the crypto-universe, being one of the first major retailers to accept bitcoin.
Through its own actions and those of its subsidiaries, it has since become indelibly linked with the industry. So linked, in fact, that events such as the SEC review into tZero’s STO and even more general cryptocurrency market dips, can greatly affect its share price.
Will tZero eventually trade on Nasdaq? Share your thoughts below!
Images courtesy of Shutterstock, Bitcoinist archives
Former chairman of the U.S. Commodity Futures Trading Commission (CFTC), Gary Gensler said that most tokens sold through Initial Coin Offerings (ICOs) should be classified as securities, Bloomberg reported Oct. 15.
Should cryptocurrencies be considered securities, they would fall under the regulatory purview of the U.S. Securities and Exchange Commission (SEC). Issuers of coins would have to comply with certain laws, register with the SEC, and disclose specific information like a description of the organization’s properties or financial statements.
When asked whether blockchain technology should be regulated, Gensler asserted that “we should be technology-neutral.” He continued, stressing the necessity to ensure investor protection within certain blockchain applications, such as cryptocurrencies. Gensler said:
“I think that cryptocurrencies like Bitcoin (BTC) need more protection, and probably more protection than even the oil markets.”
Speaking about future developments in blockchain regulation, Gensler said that there should be some sort of oversight — “traffic lights and speed limits” — to ensure confidence on “crypto roads.” Gensler said he thinks that the two will coexist, but “it will take a number of years to sort it through and get the balance right.”
Gensler’s words echo a statement from SEC Senior Advisor for Digital Assets and Innovation, Valerie A. Szczepanik, who said that “if you want [the crypto] industry to flourish, protection of investors should be at the forefront.”
Speaking at a U.S. SEC and CFTC senate hearing in February, SEC chairman Jay Clayton said that while every ICO token the SEC has seen so far is a security, a distinction should be made between tokens and major digital currencies such as BTC and Ethereum. The definition of ETH as a security has reportedly been questionable.
In December last year, Clayton issued a public statement, concluding that most tokens sold in ICOs are likely securities under U.S. law. Clayton then noted that the content of the transaction is more important than the form in determining if an investment is a security.