This is the 5th 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.
“Microsoft to Help Enterprises Mint Their Own Ethereum Tokens”
Microsoft has a platform called Azure Blockchain Tokens where they are able to to design, issue and manage a wide range of assets that only exist in one place at a time. Microsoft’s principal architect Marley Gray stated, “Because you’re closing the gap between parties collaborating together and working through business processes that will make everything from delivery services and getting meeting and appointments much easier and automatable.” It’ll be interesting to monitor the space as more of the major players continue to get involved in the industry. Full Forbes article on this Microsoft development with their Azure blockchain technology.
“US Federal Reserve Hiring Retail Payments Manager to Research Digital Currencies”
The US Federal Reserve has announced that they are seeking to hire a manager to oversee their traditional payments section, but to also research how to integrate digital currencies, stable coins and distributed ledger technology into the current system. Specifically the job posting mentions, “Facilitating and contributing to innovations research including digital currencies, stable coins, distributed ledger technologies, and broadly financial / Digital innovation in retail payments.” The Fed is beginning to study digital currencies and it will be interesting to monitor these developments as they continue to study the potential of this technology. Yahoo Finance article on this job posting by the US Federal Reserve.
“Federal Court Orders Defendants to Pay More than $4.25 Million for Fraud and Misappropriation”
As stated in the release by the U.S. Commodity Futures Trading Commission, “The order resolve a CFTC enforcement case filed on April 16, 2018, charging the defendants with fraud in connection with a binary options scam involving a virtual currency known as ATM Coin.” The Commission is charging them with soliciting public customers to invest in binary options, promising an opportunity to be paid pre-determined amounts. Blake Kanter of ATM Coin also told investors the coin was worth substantial amounts of money, when in fact it was worthless. This is yet another example of the government stepping in to regulate the space, protecting consumers and investors. Full press release from the CFTC on this court order.
“US Congress Weighs Bill Spelling Out CFTC’s Crypto Derivatives Oversight”
There is a new provision to the 2019 Commodity Futures Trading Commissions Reauthorization Act that is aiming to clarify how the regulator would collect information on digital commodities contracts and commodity swaps. The provision’s writer, Rep, Sean Patrick Maloney stated “This provision is an essential first step in our efforts to close the gap in regulation of crypto-assets in the derivatives market, fight manipulation and detect fraud.” Full writeup from Yahoo Finance on the provision, as well as a link to the CFTC Reauthorization Act of 2019 which this provision is aiming to be applied to.
“Leading Japanese Firms Partner on Security Token Research”
Mitsubishi UFJ Financial Group (MUFG) is leading a 22 member consortium to develop standards for security token management. As stated in the CoinDesk article, “The consortium is pursuing ways to develop, offer and onboard financial transactions services using blockchain, with a focus on automatic settlement for securities and funds.” This is the first of many projects MUFG has on their pipeline, so it will definitely be interesting to monitor their actions over the next couple of months. Full CoinDesk article about this development regarding MUFG and security token research.
“Hong Kong Regulator to Treat Some Crypto Exchanges Like Brokers”
On Wednesday November 6th, the Securities and Futures Commission (SFC) of Hong Kong released their positional paper on virtual asset exchanges. With this came additional restrictions on licensing conditions, such as “The licensee must only provide services to professional investors…The licensee must obtain the SFC’s prior written approval for any plan or proposal to introduce or offer a new or incidental service, or activity…The licensee must provide monthly reports to the SFC on its business activities.” The full report can be viewed here, which goes into immense detail on all of the changes set forth by the SFC, as well as the Yahoo Finance writeup of this development by the SFC.
“The SEC has Rejected Every Bitcoin ETF. This Firm Thinks It Has a Solution”
The name of the firm is Wilshire Phoenix, based out of New York, the differentiating factor with them is that their ETF will invest in both bitcoin and U.S. Treasury securities. Their founder, William Herrmann is hopeful for the proposal, he stated “we developed the ETF consistent with investor protection as well as fair, orderly and efficient markets.” Up until this point the SEC has rejected every single Bitcoin ETF that has come their way, so it’ll be interesting to see how this proposal pans out. Here’s a link to the CoinDesk article which explains more about this unique ETF proposal.
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.