This is the 4th 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.
We are biased but for us the biggest news this week was our own launch of Watchdog Capital! This is one of the biggest events in our company’s history and we are very excited about the future.
CoinDesk and other publications covered the announcement and it was great to hear from many industry members.
“Longtime Bitcoin Advocate Launches Broker-Dealer for Crypto Firms”
On Thursday October 31st we proudly announced Watchdog Capital, an SEC registered broker-dealer and member of FINRA. We are able to deal in securities transactions in the United States and this is important because the world of securities is changing, it can be a lot better than it already is.
Watchdog recognizes Bitcoin as a money and is focused on cypherpunk values of privacy, security & open source software. We are working to help change the global capital markets forever. Click below to take a look at our press release and be sure to visit our website to join our mailing list for additional updates, we’re excited to see what lies ahead.
Our Press Release is here:
Watchdog Capital Announces Decentralized Broker Dealer
“Paxos Wins SEC ‘No-Action’ Letter to Settle Equities on a Blockchain”
On Monday October 28th, Paxos Trust Co stated it will launch a blockchain based settlement platform for a limited number of U.S. listed equities after they received a “no-action” letter from the SEC. CEO Charles Cascarilla stated, “Being able to settle U.S. equities on the blockchain is an important first step. But it’s just the first step. And we’re going to continue what we have done here to be able to do more and more types of securities.” Full Reuters article on the recent development by Paxos.
“China Announces New Regulatory Authority to Certify Digital Payments, Blockchain Products”
China’s central bank will certify 11 types of fin-tech hardware and software that are widely used for digital payment and blockchain services with a new system called the Certification of Fintech Products. This will cover all the products that could be involved in digital payment technologies: POS mobil terminals, embedded application software, user front end software and security carriers and chips. This is an interesting development to the story I posted last week, where President Xi stated China is focusing on the advancement of blockchain technology. Yahoo Finance article covering the full announcement made by China.
“SEC Blasts Kik’s ‘Void for Vagueness’ Defense of
The SEC on Monday October 28th filed a discovery motion against Kik in its ongoing investigation into whether their 2017 ICO was lawful. The SEC has stated that their July 2017 DAO report drew a clear line for ICO’s, “We issued our DAO report and after that everyone in the digital assets space is on notice that if they were issuing tokens, they better do a Howey analysis and make sure that they weren’t investment contracts. You, Kik, didn’t do that and therefore you violated section 5 of the Securities Act.” Full Discovery motion filed by Stephan J Schlegelmilch / Yahoo Finance writeup of the SEC’s viewpoint into these matters.
“Bitmain Seeking US IPO With Confidential SEC Filing”
Bitmain, the Bitcoin mining giant has filed for an initial public offering (IPO) with the SEC. This comes after their recent venture in Texas, where they opened up a new mining plant that is currently capable of 25 megawatts with the ability to scale up to 300 megawatts. This also comes after their rival Canaan also filed for an IPO with the SEC earlier this week. Bitmain has previously tried to go public on the Honk Kong Stock Exchange in 2018, but that was unsuccessful, so it will be interesting to see how this pans out. Yahoo Finance article on Bitmain’s IPO filing with the SEC.
“SEC Charges International Security Based Swaps Dealer That Targeted U.S. Investors”
On Thursday October 31st the SEC charged XBT corp for “offering and selling unregistered security based swaps to U.S. investors using bitcoins and for failing to transact its swaps on a registered national exchange.” The company did not register as can FCM when they solicited or accepted futures orders from 24 U.S. customers between March of 2016 and July of 2017. Regional Director David Peavler stated in the release, “Federal securities laws impose specific requirements for offering and selling security based swaps to retail investors in the U.S. These obligations cannot be avoided merely by describing the swap transaction by a different name or funding it with digital currencies.” Full press release from the SEC on October 31st regarding this charge to XBT.
“Deutsche Börse signs Deal to Streamline Digital Securities Transfer”
Deutsche Börse is Frankfurt’s stock exchange and they have signed a partnership with fin-tech company Cashlink to allow investors to purchase digital securities. Using distributed ledger technology investors will be able to both purchase and transfer digital assets on the exchange. This is a standout announcement because the securities offered will automatically have the same regulation guarantee as other listings on the exchange. Cashlink CEO had to say, “The digital securities are suitable for various purposes, for instance as an alternative to conventional venture capital financing, as digital employee participation, as a digital representation of venture capital funds or for investment by non-European investors.” Yahoo finance article overviewing the Deutsche Borse deal.
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.