Cypherstreet Securities Week – Volume 14 – January, 11, 2020

This is the 14th post for the weekly series on the state of securities with a focus on fintech, Bitcoin, blockchains & distributed ledgers.

Here are some of the key developments, stories & updates from the digital securities industry over the past week.

SEC Releases their 2020 Examination Priorities

Earlier this week, the SEC released their 2020 examination priorities and included on this was a section on financial technology and innovation, as well as digital assets and electronic investment advice. We have seen what happens when companies choose to ignore securities laws and move forward with their offering, the battle between the SEC and Telegram is a perfect example of this. The laws are very outdated and with the emergence of this technology comes a need for updated laws and with this release by the SEC it seems like that is something they recognize. "The digital assets market has grown rapidly and presents various risks, including for retail investors who may not adequately understand the differences between these asset and more traditional products." Hopefully this will lead to updates to securities laws focused around the emergence of digital assets. Here's a link to the full release by the SEC of their 2020 National examination program priorities.

"NBA Player's Contract Tokenization Plan Can Move Forward: Reports"

Spencer Dinwiddie is an NBA player who plays for the Brooklyn Nets and he has been trying to receive permission to tokenize his contract for the past few months. On Friday he tweeted out that "the Spencer Dinwiddie bond launches January 13th" indicating that he may have received the green light from the NBA and will be moving forward with this plan. This plan will work with Dinwiddie tokenizing his three-year, $34.5 million contract, opening up the option to raise the contracts value as an up-front sum with token holders receiving payouts over the course of the contract duration. Initially the NBA was not in support of this, so Dinwiddie modified the plan to offer a flat bond instead which will allow accredited investors to, "purchase tokens for a minimum $150,000 buy-in, giving him his contract's value up front." Paxos will be providing the escrow services and help facilitate payouts for this. The NBA has not officially given permission for this, so we'll have to see how this plays out over the next few weeks. Yahoo Finance article on this recent announcement by Spencer Dinwiddie.

"Crypto Trading Privacy Gets a Boost as $15M of Tether Moves to Liquid Sidechain"

On January 7th, Tether initiated a cross-chain swap of 15 million USDT reserves from ethereum to Blockstream's Liquid, a sidechain of Bitcoin. One of the major possible benefits of this would be the addition of privacy that it provides through "confidential assets - a privacy tool which blinds asset values on public ledgers via a protocol called 'confidential transactions'" This means that a trader could shift some tether to an exchange to purchase bitcoin, without alerting the general market of this movement, who may try to either drive the price up or down before the purchase. There are a lot of regulations focused on securities specifically when it comes to privacy so this may have a potential impact on the securities market. Here's the CoinDesk article on this development by the Blockstream Team and Tether.

"Securrency Pulls in $17.75M During Successful Series A"

Securrency is a company whose mission is to "enhance capital formation and stimulate global liquidity by deploying state-of-the-art technology that is convenient, efficient, and interoperable" recently closed a successful Series A round of funding where they pulled in $17.75M. They had 6 leading participants in the raise including Pantera Capital and Wisdom Tree Investments. Current practices are outdated and inefficient, with blockchain technology comes the potential to drastically reduce bottlenecks while reducing the dependence on trusted 3rd parties. Here's a link to article on this announcement by Securrency.

That's all for this week, check back in next week to learn all about what's happening in the rapidly evolving digital securities industry! Feel free to leave any comments below & if you're interested in following this weekly roundup be sure to click on "Notify me of new posts by email" underneath the comments box below to receive an alert for each new post.

Leave a Reply