Cypherstreet Securities Week with Bruce Fenton – Volume 3 – October, 26, 2019

This is my 3rd post for a new 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.

"US Lawmaker Introduces Bill Classifying Stablecoins as Securities"

On Tuesday October 22nd Representative Sylvia Garcia (Democrat from Texas) introduced legislation to the House Financial Services Committee to regulate stable coins under the Securities Act of 1933. In the bill she claimed that "Digital assets, known as managed stable coins, are investment contracts and therefore are securities within the meaning given the term in section 2(a) of the Securities Act of 1933." Full Discussion draft from Representative Garcia.

This is more of the same silliness and anti-business meddling Congress has been doing for years, The Libra hearings with Mark Zuckerberg were an embarrassing display of ignorance and hubris.

The securities laws are fine, if anything we need less regulation, especially when it comes to accredited investor rules and rules around AML/ KYC.

"New York's Financial Regulator is Reviewing the Controversial BitLicense"

NYDFS (New York Department of Financial Services) Superintendent Linda Lacewell said on Tuesday 10/22 that her agency is currently looking into the BitLicense, which requires any companies conducting crypto transactions with New York residents to be licensed to operate in New York. She implied to not be too optimistic with changes to the regulation, but added "With any new and emerging industry, it's good to take a close look and see if there's any aspect maybe [where] there's something we need to add." Full CoinDesk article about the NYDFS' statement regarding BitLicense.

"FinCEN Director Warns of 'Hard Time' for Crypto Firms That Don't Follow Law"

Kenneth Blanco, who is the director of the Financial Crimes Enforcement Network (FinCEN) warned the industry on Monday October 21st that crypto startups need to follow U.S. anti-money-laundering laws or suffer the consequences. Although he wanted to make clear that his agency is not against innovation, "Innovation...must be responsible and it must be reasonable. You can't just build a car that only goes 190 miles an hour and say 'change the speed limit', it's not going to work that way." Full Yahoo Finance Article.

"Zuckerberg: Facebook Would Quit Libra if the Association Launched Prematurely"

On Wednesday October 23rd Mark Zuckerberg (CEO of Facebook) testified before the House Financial Services Committee about their Cryptocurrency and Wallet Project, Libra and CoLibra respectively. During this hearing he made it very clear that Facebook would be pulling out of the project if the Libra Association decided to move forward without U.S. regulatory approval. Full hearing between Zuckerberg and House Financial Services Committee. / Full CoinDesk analysis of the hearing.

"Bakkt Bitcoin Options on Futures to Launch December 9th"

Bakkt announced on Thursday October 24th that they would be "launching the first regulated options contract for bitcoin futures." CEO Kelly Loeffler stated, "The Bakkt Bitcoin Options contract will be based on the benchmark Bakkt Monthly Bitcoin Futures contract and represents another important step in developing this asset class for institutional investors, their customers and investors." It'll be interesting to keep an eye on the trading volume over the next few months, full medium post from CEO Kelly Loeffler on the development.

"US Financial Regulatory Agencies Join the Global Financial Innovation Network"

The Commodity Futures Trading Commission (CFTC), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and the Securities and Exchange Commission (SEC) announced on Thursday 10/24 that they would be joining the Global Financial Innovation Network (GFIN). As stated in the join press release, "Participation in the GFIN furthers these objectives and enhances the agencies' abilities to encourage responsible innovation in the financial services industry in the United States and abroad." It'll be an interesting development to monitor, here's the full joint press release from the four regulatory agencies.

"President Xi Says China Should 'Seize' Opportunity to Adopt Blockchain"

President of China, Xi Jinping stated on Thursday October 24th that, "We must take the blockchain as an important breakthrough for independent innovation of core technologies...increase investment, focus on a number of key core technologies, and accelerate the development of blockchain technology and industrial innovation." It is believed that this is the first public statement he has made on blockchain technology. Full Reuters article on President Xi's statement.

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.

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