I’m starting a new weekly series on the state of securities with a focus on fintech, Bitcoin, blockchains & distributed ledgers.
Our old and established industry which didn’t see many innovations for years is now booming in development and innovation. The use of distributed ledgers has the potential to completely transform the way securities work. If this happens it may change the face of our global economy.
Here are some of the biggest developments, stories & updates from the digital securities industry over the past week.
“Japan’s Nomura Invests in Line’s LVC to Develop Blockchain Financial Services”
Japan’s oldest brokerage (Nomura) forms a blockchain centered partnership with the operator of the country’s most popular messenger (Line). This venture will be focused on developing financial services utilizing blockchain technology. Full article can be found here.
Nomura is absolutely huge and has been a major force in Japanese securities for many years.
“VanEck and The Investment Case for Bitcoin”
VanEck put together an article outlining all of the positive investment cases surrounding Bitcoin & it’s potential as a store of value. They go over Bitcoin’s correlation to traditional assets, potential returns when allocating a small portion of the portfolio to Bitcoin & scarcity in relation to value. It’s an interesting view on Bitcoin, the full article/presentation can be found here.
This is significant because it’s part of the trend of large and established firms considering Bitcoin as an asset worth covering. Many more people are educated about the unique properties of Bitcoin.
“Bitcoin ETF Gets Rejected by the SEC”
On Wednesday 10/9 the SEC once again rejected the latest attempt at creating a Bitcoin exchange-traded fund (ETF) citing concerns about fraudulent activity & market manipulation. Click here for full SEC Report or here to read CoinDesk’s writeup.
I don’t actually think a Bitcoin ETF is that significant. It’s just old rails with a new product. Much more exciting will be seeing Bitcoin directly available in brokerage accounts with no ETF needed.
“Spooked by Libra, EU pledges to regulate digital currencies”
On Tuesday October 8th, the EU’s finance commissioner Valdis Dombrovskis pledged to propose new rules to regulate virtual currencies, “Europe needs a common approach on crypto-assets such as Libra, I intend to propose new legislation on this.” Click here to read the full Reuters article on this development.
“SEC, CFTC, FinCEN Warn crypto Industry to Follow US Banking Laws”
The statement was signed by the Commodity futures Trading Commission Chairman Heath Tarbert, Financial Crimes Enforcement Network Director Kenneth Blanco & Securities and Exchange Commission Chairman Jay Clayton warning the industry that they need to comply with all banking & financial services laws in the U.S. Full CoinDesk article can be found here.
Overall this doesn’t seem to be much new from previous rules and shouldn’t have a major affect on companies who are already complying with regulations.
“Russia Begins Regulatory Framework for Security Tokens”
Russia currently has 3 main crypto-related bills going into enforcement over the next couple of months, as well as working on their own native cryptocurrency. One of the bills is specifically focused on ICO laws, which will deal with campaigns such as security token offerings. Full write-up here.
“The IRS Just Issued Its First Cryptocurrency Tax Guidance in 5 Years”
The IRS has not released an updated tax guidance statement since 2014 & as the industry has evolved a lot since then there have been a lot of unanswered questions. The statement covers the tax liabilities created by cryptocurrency forks, the acceptable methods for valuing cryptocurrency received as income & how to calculate taxable gains when selling cryptocurrencies. Full CoinDesk article can be found here as well as the official IRS statement.
There are a lot of massive problems with this. I don’t think it can stand and believe it will he changed, clarified or overturned. It seems entirely unworkable, particularly the guidance on forks.
“SEC Halts Alleged $1.7 Billion Unregistered Digital Token Offering”
As the SEC says in the notice, it’s been very clear that digital offerings need to follow securities regulations. Attempting to pretend an instrument isn’t a security isn’t going to fly.
Activism: “I disagree with the drug war, I will support changing the laws by education & lobbying my elected reps.”
Stupidity: “I don’t care what ‘the man’ says, I’m opening a dispensary in downtown NYC with no license. I’ll call it a vitamin store. They can’t stop vitamins!”
Many companies in the space ask like the later. SEC regs have been here 86 years and are not going away. Full SEC release.
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.