Switzerland Enacts ICO Guidelines

Switzerland Enacts World’s First ICO Guidelines

Just days before the tiny nation of Gibraltar was said to draft their first initial coin offering (ICO) regulations, Financial Market Supervisory Authority (FINMA) of Switzerland appears to have stolen its thunder in an eleven page document published today. It could be the standard by which developed countries look to install their own versions.

Also read: Citibank India Bans Bitcoin 

Switzerland Publishes ICO Guidelines

“The guidelines also define the information FINMA requires to deal with such enquiries and the principles upon which it will base its responses,” an agency press release began, “creating clarity for market participants.”

ICOs have bedeviled regulators the globe over since their inception Summer of 2013 as a creative way to crowdfund projects. They deliberately mirror initial public offerings, IPOs, which are famously used to bring traditional companies to market. However, IPOs have taken all the trappings that come with success: barriers to entry making them a very expensive proposition, requiring gaggles of lawyers and regulatory hoop-jumping. ICOs, due to their nascency, have gotten around all that to the tune of 6 billion USD in 2017 alone.

Switzerland Enacts World’s First ICO Guidelines

“FINMA has seen a sharp increase in the number of initial coin offerings (ICOs) planned or executed in Switzerland and a corresponding increase in the number of enquiries about the applicability of regulation,” the regulator insists. Following up on their Spring of last year Guidance document, “setting out how it intends to treat enquiries from ICO organisers,” FINMA wishes to solidify “transparency at this time” as it “is important given the dynamic market and the high level of demand.”

ICOs are a participatory token economy in the literal, digital sense. They usually focus upon a specific project, and combinations and permutations on this idea are as vast as the myriad of ICOs themselves: ownership in a company, payouts, tradeable coins, some of which are expected to appreciate beyond just being a digital stock certificate. They’re an adventuresome investment, and, as these pages have well-documented, slickly written white papers and website landing pages have often amounted to little more than exit scams.

Not All ICOs are Equal

A vast majority of ICOs rely upon the Ethereum platform and its Ethereum Request for Comments (ERC20), which is used for smart contracts. Something like over twenty one thousand such contracts exist, and estimates hold that ERC20 commands a supermajority ICO marketshare.

Swiss guidelines are “not applicable to all ICOs. Depending on the manner in which ICOs are designed, they may not in all cases be subject to regulatory requirements. Circumstances must be considered on a case-by-case basis […] At present, there is no ICO-specific regulation, nor is there relevant case law or consistent legal doctrine.” As such, “FINMA will focus on the economic function and purpose of the tokens (i.e. the blockchain-based units) issued by the ICO organiser. The key factors are the underlying purpose of the tokens and whether they are already tradeable or transferable.”

Switzerland Enacts World’s First ICO Guidelines

Swiss guidelines subdivide tokens into three classes: payment, utility, and asset. Payment tokens are basically cryptocurrencies as most understand them; utility tokens are access to services; asset tokens function more like derivatives, bonds, equities, and can serve as interest or dividend payments.

FINMA’s deepest worry involves anti-money laundering (AML) law subversion. “FINMA’s analysis indicates that money laundering and securities regulation are the most relevant to ICOs,” and as such guidelines contain “requirements for financial intermediaries including, for example, the need to establish the identity of beneficial owners.” Revealingly, the agency baldly asserts, “Money laundering risks are especially high in a decentralised blockchain-based system, in which assets can be transferred anonymously and without any regulated intermediaries.”

Switzerland Enacts World’s First ICO Guidelines

Supportive of Blockchain Technology

ICOs with payment token arrangements FINMA won’t be thought of as securities, and instead be required to comply with AML regulations already in place. Additionally, utility token ICOs “do not qualify as securities only if their sole purpose is to confer digital access rights to an application or service and if the utility token can already be used in this way at the point of issue.”

Asset token ICOs, however, “FINMA regards asset tokens as securities, which means that there are securities law requirements for trading in such tokens, as well as civil law requirements.” Where there are hybrids, it appears the most regulation applies rather than a default to a less regulated token.  

The Swiss body was careful to suggest it supports blockchain development, and it quotes FINMA head Mark Branson as insisting, “The application of blockchain technology has innovative potential within and far beyond the financial markets. However, blockchain-based projects conducted analogously to regulated activities cannot simply circumvent the tried and tested regulatory framework. Our balanced approach to handling ICO projects and enquiries allows legitimate innovators to navigate the regulatory landscape and so launch their projects in a way consistent with our laws protecting investors and the integrity of the financial system.”

Do you think FINMA’s guidelines will be the world standard? Let us know in the comments section.


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Crypto Trading in 2018: New Strategies, Bigger Crowds and Diminishing Returns

Crypto Trading in 2018: New Strategies, Bigger Crowds and Diminishing Returns

The cryptocurrency landscape has changed significantly over the past 12 months. Gone are the guaranteed returns of 5x, 10x or greater on ICOs, as a growing number of investors clamor for a piece of the pie. New coins, new forks, and new airdrops have created a competitive marketplace characterized by diminishing returns and reduced profits. The best traders are still able to claim the lion’s share of the rewards though, leaving the rest to fight it out for the scraps.

Also read: Telegram Followers – The New Metric for Cryptocurrency Success

Welcome to 2018, Where 20% Is the New 20x

Crypto Trading in 2018: New Strategies, Bigger Crowds and Diminishing ReturnsUp until last year, the best performing ICOs could be expected to net investors an easy 10x profit by flipping tokens the moment they were listed on an exchange. 2017’s best performers include Spectrecoin, which has provided a 2,143x return on its token price, Qtum (106x) and Neblio (103x). 2018’s best performer, Bluzelle, in comparison, has managed a mere 5x on its ICO price to date. That’s still a healthy profit admittedly, especially when compared to the sort of single digit gains to be enjoyed in traditional asset markets. But by cryptocurrency standards, 500% is small fry.

There are a number of reasons behind the reduced dividends. For one thing, the world has now caught on. Telegram groups promote the most promising ICOs, while projects that attract rapid community interest are prominently promoted, leaving fewer undiscovered gems. Everyone’s looking for the next Stratis, Dragonchain, or Antshares, and it’s not just crypto investors who are wise to this – so are the ICOs issuing the tokens. The best projects, or rather the ones that are generating the most hype, are able to raise their hard cap, increase the number of tokens issued, and bump up the token price in the knowledge that they’ll still sell out in hours. As notorious Twitter trader and shitposter Romano put it, “20% is the new 2x”.

Big Exchanges Are Triggering Smaller Pumps

20% seems an accurate figure for the sort of price bump that tokens added to major exchanges such as Binance and Kucoin can now expect. Bittrex, which has stagnated for months, has finally begun clearing out some of the deadwood, delisting tokens with low trading volume and replacing them with newer entrants. Its latest addition, Vatoms (VEE), was introduced on Friday, whereupon its price pumped by a modest 20%. Six months ago, the same feat would have seen a token previously only available on decentralized exchanges comfortably double in price.

Crypto Trading in 2018: New Strategies, Bigger Crowds and Diminishing Returns

Sites like Etherdelta and IDEX used to be frequented by more experienced traders on account of the complexities of using them, though the masses are catching on. Etherdelta’s interface is notoriously counterintuitive to use, even after successfully completing numerous transactions, while IDEX is at least a little more user-friendly. It’s not rocket science, but neither is it as seamless as setting a buy order on Binance. In January’s altcoin market, everyone was a winner, with everything from scamcoins to shitcoins pumping, causing newbs to conclude that they’d mastered the art of trading. As the mania dispersed and more bearish conditions set in, many of these newfound “pros” were forced to conclude that hodling was perhaps a safer strategy, leaving the riskier trades to those with the crypto wealth and TA skills to make it work.

100x Leverage Is Not for the Fainthearted

One exchange where it’s still business as usual for the top dogs is Bitmex. Thanks to its margin trading of up to 100x, skilled traders can profit handsomely off even the slightest moves in bitcoin’s price. It’s a high risk strategy that’s not for the fainthearted or the charting illiterate. The best of the best are still doing as well as ever though, with AngeloBTC the Twitter trader currently top of the heap.

Crypto Trading in 2018: New Strategies, Bigger Crowds and Diminishing Returns

The changed cryptocurrency landscape hasn’t entirely disadvantaged new traders and investors of low means. Thanks to the craze for airdrops, in which free tokens are awarded to community members for tasks such as following an ICO’s social channels, it’s possible to net up to $500 a month in freebies. It’s not a lot to play with, but with patience and perseverance these meager crumbs can be turned into a respectable pile, aided by a few shrewd trades along the way. The easy money in cryptocurrency may be no more, but there are still plenty of ways for enterprising investors to turn a little into a lump sum.

Do you think cryptocurrency trading has gotten more competitive? Let us know in the comments section below.


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ICO Craze Lures Australian Investors

ICO Craze Lures Australian Investors

The hype surrounding the profit-potential associated with initial coin offerings (ICOs) is continuing to attract participation from Australian investors. Despite the potential to incur fast losses just as easily as fast profits, many Australians appear to be dabbling with casual cryptocurrency investment.

Also Read: US Regulator Warns Against Pump-and-Dumps and Advises How to Buy Crypto

Australian Investors Seek ICO Exposure

ICO Craze Lures Australian InvestorsInitial Coin Offerings are attracting investment from ordinary Australians, with a recent report by the Australian Broadcasting Corporation describing the experiences of many investors actively trading the ICO markets.

Warren Stokes, a 58-year-old casual crypto investor, recounts being introduced to the world of cryptocurrencies when his high school-aged son began receiving postal bags filled with $50 notes in the mail approximately seven years ago. “He explained to me he was on a group on Reddit,” Mr. Stokes said, “1,000 people were joining their computers together to mine, […] honestly, I had no idea what he was talking about.”

Risks Posed to New Investors

ICO Craze Lures Australian InvestorsAlex Saunders, a Youtuber who has covered the cryptocurrency markets since 2012, has indicated that some ICO investors are gaining exposure using borrowed money, stating “I’ve heard people are taking out money on their home loans to get into cryptocurrency. Unfortunately, there are lots of people in this space and this is their first investing experience so they’ve been burnt once or twice and they’re learning that the hard way.”

Forty-year-old Australian, Neil, has invested in roughly nine ICOs so far. Neil attests to having had mixed experiences with initial coin offerings, stating “With the number of scammers out there who have made really high-quality fake websites and fake LinkedIn profiles … it’s actually very difficult to know what’s true and what’s not.” Neil stated his belief that the recent frenzy surrounding ICOs may now be dying down, stating that initial coin offerings now must prove their value as a genuine financial tool.

For Mr. Stokes, many of the losses incurred by new traders are the consequence of the inexperience with the psychology induced by trading. “Some people who don’t know how to ride out a drop have sold out at the bottom,” he said. “There will be a lot of people who will panic and lose their money.”

What is your opinion regarding the present outlook for the recent ICO boom? Do you think the hype is start to plateau? Or are was 2017 just the beginning? Share your thoughts in the comments section below!


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SEC Suspends Trading of Three Companies With Ties to Cryptocurrency

SEC Suspends Trading of Three Companies With Ties to Cryptocurrency

The U.S. Securities and Exchange Commission (SEC) has suspended trading in the stocks of three companies with ties to cryptocurrency. One of the three is also planning an initial coin offering. The SEC says it is concerned about the nature of the companies’ business operations and the value of their assets.

Also read: Japan’s DMM Bitcoin Exchange Opens for Business With 7 Cryptocurrencies

SEC Suspends Trading of Three Stocks

The SEC has “suspended trading in three companies amid questions surrounding similar statements they made about the acquisition of cryptocurrency and blockchain technology-related assets,” the agency announced on Thursday. They are Cherubim Interests, PDX Partners, and Victura Construction Group. The three stocks are traded over-the-counter, with a market capitalization of less than $5 million each, according to Factset. The suspension is temporary, beginning on February 16 and ending on March 2.

SEC Suspends Trading of Three Companies With Ties to CryptocurrencyThe agency stated that the three companies issued press releases claiming that they have “acquired AAA-rated assets from a subsidiary of a private equity investor in cryptocurrency and blockchain technology, among other things.” However, the SEC says there are questions regarding the nature of the companies’ business operations and the value of their assets.

In addition, Cherubim Interests also announced that it will launch an initial coin offering (ICO). The trading suspension of this company’s shares is also due to its delinquency in filing annual and quarterly reports with the Commission.

Acquisitions and ICO

The three companies’ press releases list the same chief executive officer, Patrick J. Johnson, “who played for the Oregon Ducks and the Baltimore Ravens in the NFL,” wrote the Oregonian.

SEC Suspends Trading of Three Companies With Ties to CryptocurrencyJohnson told the publication that PDX Partners makes iPhone apps, adding that last month the company “acquired $350 million in assets belonging to a private equity firm called NVC Fund Holding Trust, whose portfolio includes ‘cryptocurrency and business financial services’.”

Cherubim Interests and Victura Construction Group have also made similar acquisitions. Furthermore, the former announced on January 3 that it has “executed a financing commitment of $100,000,000 to launch [an] initial coin offering for The Self Sustaining Intentional Communities Coin (Symbol SJT),” adding that “The sale of the coins will generate the capital to create self-sustaining intentional communities across the US and across 57 nations.”

Regulators’ Warnings

In August of last year, the SEC issued an Investor Alert about public companies making ICO-related claims. “The SEC’s Office of Investor Education and Advocacy is warning investors about potential scams involving stock of companies claiming to be related to, or asserting they are engaging in, Initial Coin Offerings (or ICOs),” the agency wrote, adding that “Fraudsters often try to use the lure of new and emerging technologies to convince potential victims to invest their money in scams.”

The SEC’s action against the three companies come at the same time another US regulator, the Commodity Futures Trading Commission (CFTC), issued a warning about dump-and-pump schemes involving “thinly traded or new ‘alternative’ virtual currencies, digital coins or tokens.”

What do you think of the SEC’s action? Let us know in the comments section below.


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Atari Joins Growing List of Old Brands Trying To Revitalize Through Cryptocurrency

Atari Joins Growing List of Old Brands Trying To Revitalize Through Cryptocurrency

For generation X-ers, old enough to remember a time when photographs were analogue and games consoles were 16-bit, brands such as Kodak and Atari evoke fuzzy nostalgia. Nothing perfect lasts forever though, and those companies which once dominated their respective spheres have not aged well. Many assumed these 80s stalwarts had already given up the ghost amidst growing financial problems. As it turns out, not only are the Kodaks and Ataris of the world still limping on, but they’re seeking an injection of new blood and fresh capital in the form of an ICO (Initial Coin Offering).

Also read: Kodak Getting Into Bitcoin Mining

The Childhood Companies Coming for Your Crypto

Atari Joins Growing List of Old Brands Trying To Revitalize Through CryptocurrencyKodak’s descent from photographic giant to failed firm desperately trying to find its niche is a sad one for anyone old enough to associate the name with better times. In the pre-digital age, companies such as Kodak and Atari were mainstays of popular culture. Times change and the companies that fail to innovate get left behind. Kodak’s sudden transformation into crypto miner and ICO entrant has already been picked apart. Atari’s has attracted less scrutiny, but bears many of the same hallmarks.

In 2013, Atari filed for bankruptcy which, coincidentally, was the same year that Kodak followed suit. Five years on and Atari is throwing its hat into the blockchain ring. The pattern is a predictable one now: company trading on former glories announces ICO. Stock leaps by over 50%. Reality settles in. Stock tumbles. The company once synonymous with such classic games as Space Invaders, Pac-Man, and Asteroids is now seeking to establish a reputation as a cryptocurrency pioneer, powered by its Atari Token.

Faded 80s Brands Are Coming for Your Crypto and Ruining Your Childhood

You Nostalgia, You Lose

Brands are obliged to move with the times. The alternative is extinction. Thus it would be unrealistic to expect Atari to base its core business model around churning out retro consoles, just as it would be unrealistic to expect Kodak to turn a profit from selling photographic film. The entry of these brands into the crypto space is not in itself a cause for concern or recipe for mockery. Rather, it’s the way in which these firms have gripped onto this outstretched branch in a bid to break their fall that invites scepticism.

Faded 80s Brands Are Coming for Your Crypto and Ruining Your Childhood

Investment research firm Kerrisdale Capital savaged Kodak’s proposed ICO, branding it “worthless” and the last grasp of a “dying relic of American manufacturing”. Little is known about Atari’s proposed cryptocurrency, other than that the company’s CEO Frederic Chesnais was quoted as saying: “Blockchain technology is poised to take a very important place in our environment and to transform, if not revolutionize, the current economic ecosystem, especially in the areas of the video game industry and online transactions”.

Faded 80s Brands Are Coming for Your Crypto and Ruining Your Childhood

Until more information emerges, Atari deserves the benefit of the doubt. It is hard to shake the feeling though that these companies are less interested in blockchain’s disruptive potential than its ability to prop up their balance sheets. Beware of faded brands coming for your crypto and tainting your childhood memories into the bargain.

Do you think Atari’s entry into the cryptocurrency market is genuine or is it just a cash grab? Let us know in the comments section below.


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US Regulator Warns Against Pump-and-Dumps and Advises How to Buy Crypto

US Regulator Warns Against Pump-and-Dumps and Advises How to Buy Crypto

The U.S. Commodity Futures Trading Commission (CFTC) has issued its first warning against pump-and-dump schemes involving cryptocurrencies while giving advice on how to buy crypto. This warning follows previous warnings by two other U.S. regulators.

Also read: Japan’s DMM Bitcoin Exchange Opens for Business With 7 Cryptocurrencies

CFTC’s Warning

US Regulator Warns Against Pump-and-Dumps and Advises How to Buy CryptoThe CFTC issued a Customer Protection Advisory on Thursday to warn the public to “beware of and avoid pump-and-dump schemes that can occur in thinly traded or new ‘alternative’ virtual currencies, digital coins or tokens.”

CFTC Director of Public Affairs Erica Elliott Richardson explained, “As with many online frauds, this type of scam is not new – it simply deploys an emerging technology to capitalize on public interest in digital assets,” adding that:

Pump-and-dump schemes long pre-date the invention of virtual currencies…The CFTC encourages all customers to thoroughly research potential investments, stay informed about tactics commonly used in investment fraud, and avoid investment opportunities they don’t fully understand.

Common Pump-and-Dump Tactics

The agency explained that “the organizers of the scheme will commonly spread rumors and urge immediate buying,” often through social media, noting that:

Some pump and dumps use false news reports, typically about a famous high-tech business leader or investor who plans to pour millions of dollars into a small, lesser known virtual currency or coin. Other fake news stories have featured major retailers, banks, or credit card companies, announcing plans to partner with one virtual currency or another.

After a certain length of time following the pump, the Commission states, the dump will begin. “The price falls and victims are left with currency or tokens that are worth much less than what they expected. From beginning to end, these scams can be over in just a few minutes,” the agency describes and immediately advises: “Customers should avoid purchasing virtual currency or tokens based on tips shared over social media.”

What Crypto Buyers Should Do

US Regulator Warns Against Pump-and-Dumps and Advises How to Buy CryptoCiting that its job is to maintain “general anti-fraud and manipulation enforcement authority over virtual currency cash markets as a commodity in interstate commerce,” the CFTC revealed that it has received complaints from customers who have lost money to pump-and-dump schemes. Emphasizing that ultimately, “Customers should not purchase virtual currencies, digital coins, or tokens based on social media tips or sudden price spikes,” the Commission stated:

Customers can best protect themselves by purchasing only alternative virtual currencies, digital coins, or tokens that have been thoroughly researched – to separate hype from facts.

Last month, the CFTC took action against three cryptocurrency operators and their founders for commodity fraud and misappropriation.

CFTC Joins SEC and Finra in Warnings

US Regulator Warns Against Pump-and-Dumps and Advises How to Buy CryptoThe U.S. Securities and Exchange Commission (SEC) has repeatedly warned against pump-and-dump schemes as well as market manipulations involving any financial instruments that can be classified as securities. In August, the agency issued a statement alerting investors of pump-and-dump schemes involving initial coin offerings (ICOs).

SEC Chairman Jay Clayton made a statement in December cautioning investors against “promoting or touting the offer and sale of coins without first determining whether the US Regulator Warns Against Pump-and-Dumps and Advises How to Buy Cryptosecurities laws apply to those actions,” specifically those related to cryptocurrencies and ICOs. “Selling securities generally requires a license, and experience shows that excessive touting in thinly traded and volatile markets can be an indicator of ‘scalping,’ ‘pump and dump’ and other manipulations and frauds,” he described. The chairman then reiterated the same message last week.

In December, the U.S. Financial Industry Regulatory Authority (Finra) also issued a statement warning investors not to fall for crypto-related stock scams including pump-and-dump frauds, advising them to:

Do your research before purchasing shares of any company offering investment opportunities in cryptocurrency…Don’t be fooled by unrealistic predictions of returns and claims made through press releases, spam email, telemarketing calls or posted online or in social media threads. These actions may be signs of a classic ‘pump and dump’ fraud.

What do you think of the CFTC’s guidance? Let us know in the comments section below.


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Token Holders Don’t Give a Damn About Voting Rights and Community Governance

Token Holders Don’t Give a Damn About Voting Rights and Community Governance

You’ve probably heard of The DAO and you’ve certainly heard of the ICO. Now say hello to the DAICO, an “innovative fundraising model” that aims to combine the best of both frameworks. The Abyss Platform is the first project to utilize this hybrid organizational structure, which has been credited as the brainchild of Vitalik Buterin. There’s just one problem with The DAO, the ICO and the mutant DAICO it’s spawned – the public couldn’t give a damn about key tenets such as voting rights and community governance. All they want is cheap tokens they can flip for a quick profit.

Also read: U.S. Corporate Customers Barred From Bitfinex’s Margin Markets

Live and Let DAICO

The DAO (decentralized autonomous organization) was the first major project to be launched on the Ethereum blockchain, complete with a novel governance structure that replaced a board of directors with a community-run model. It didn’t end well. A vulnerability in the code saw one third of the ether committed to the project stolen and The DAO collapsed. As prominent crypto critic and agent provocateur Preston Byrne explains:

The original DAO could pass resolutions with a simple majority drawn from quorum of 20% (meaning as little as 10% +1 of the investors could bind the remaining 90%). No resolution ever passed because none of the tokenholders actually cared enough about what the DAO was doing in order to participate. Their primary motivation was to sit on their hands and wait for their investment to pay off.

Byrne may be a perennial bitcoin bear, but as a practising English solicitor, he knows more than most when it comes to the sort of legal matters that DAOs and DAICOs were meant to solve. Take a look at many of this year’s ICOs and you’ll find, somewhere in their roadmap, talk of token holders being empowered to vote on key protocol changes including platform developments and new features. It all sounds very progressive and democratic, but the trouble is even the loyalest of community members don’t care enough to want to micromanage decisions using the power invested in them by tokens. The real reason why ICOs are so eager to assign voting rights to their investors is to add legitimacy to their claim that the token is a utility and not a security.

Token Holders Don’t Give a Damn About Voting Rights and Community Governance

Good Intentions Lost in the Abyss

The Abyss “merges some of the benefits of Decentralized Autonomous Organizations (DAOs), aimed at upgrading and making the initial ICO concept more transparent and secure”. It allows “token holders to control the fund withdrawal limit, also providing an option to vote for refund of the remaining contributed money in case the team fails to implement the project, with Oracles (appointed industry leaders) acting as arbitrators.” The idea is plucked from a concept Vitalik Buterin mooted a few weeks back.

Token Holders Don’t Give a Damn About Voting Rights and Community Governance

In his scathing critique of the DAICO, Preston Byrne writes: “I feel like I’m taking crazy pills here, because the SEC literally wrote a report about the original DAO scheme, likened it to a security, and cited as authority for this proposition not one but TWO cases relating to an infamous 1970s pyramid scheme that landed its promoter in federal prison for nearly a decade.”

He finishes: “A DAICO is nothing more than a new acronym for the same old bad ideas. The broken DAO concept, in particular, requires extensive rethinking and movement onto private/permissioned blockchains in order to shed its pyramid scheme-like qualities and serve a useful function. On account of which I am completely amazed that anyone would want to combine the DAO and ICO concepts under any circumstances.”

Original thinking deserves a chance to flourish, and blockchain governance – for all its pitfalls – may yet find a way to work. It probably won’t arrive in the form of the DAICO though or any of the other “revolutionary” governance models being used to float the current crop of crowdsales. Good ideas will ultimately prevail, while the ones deemed too wacky and unworkable will return to the abyss that spawned them.

Do you think blockchain democracy and token-based voting is a viable concept, or is it destined to fail? Let us know in the comments section below.


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Russia Drafts Bill to Accredit ICO Issuers – Public Comments Wanted

Russia Drafts Bill to Accredit ICO Issuers - Seeks Public Comments

The Russian government is drafting a bill to introduce the accreditation of initial coin offering issuers. Accredited organizations must comply with a set of rules, including having 100 million rubles capital, and are subject to inspections every three years. The regulators are currently accepting public comments on the proposal.

Also read: Japan’s DMM Bitcoin Exchange Opens for Business With 7 Cryptocurrencies

Accrediting ICO Issuers

Russia Drafts Bill to Accredit ICO Issuers - Seeks Public CommentsThe Russian Ministry of Communications and Mass Media has submitted a proposal to accredit the issuers of initial coin offerings (ICOs) “on a voluntary basis for a period of five years,” the document reads.

This proposal details the procedure for accrediting organizations that issue digital tokens. It has been published on the Russian government’s portal of normative legal acts and the regulators are currently seeking public comments on the plan.

A digital token is defined in the proposal as “a record in a distributed information system created using cryptographic (encryption) means that certifies that the holder of the digital token has the right to receive from the person who posted the initial (initial) digital token of the initial (nominal) value token by presenting this token.” Under the proposal, Tass summarized:

The organization must comply with a number of criteria: registration in the territory of the Russian Federation in accordance with the legislation on state registration of legal entities; a charter capital of at least 100 million rubles; a license to develop, produce and distribute cryptographic funds; and a special account with a bank, obtained as a result of the sale of digital tokens.

Mandatory Rules

Russia Drafts Bill to Accredit ICO Issuers - Seeks Public CommentsThe accredited ICO issuers are required to adopt a number of mandatory rules. Firstly, they must “redeem digital tokens at a nominal price from any bearer of a digital token on the basis of an irrevocable public offer,” the news outlet described. Secondly, they are obligated to “issue digital tokens for Russian rubles through a cashless settlement.” In addition, they have a “duty to use funds received from purchasers of digital tokens, only for purposes related to maintaining the ability to fulfill the obligation to redeem digital tokens at a nominal price.”

The publication further noted:

The Ministry of Communications will decide on accreditation or refusal of accreditation within 30 days after receiving the application. Accredited organizations will also be subject to inspections every three years (with the exception of unscheduled inspections) for compliance with the requirements of the provision.

Despite the strict requirements for would-be ICO issuers, the Minister of Communications and Mass Media, Nikolai Nikiforov, commented last week that “it is very important in all projects of the digital economy not to over-regulate what is just emerging,” according to Tass. RBC also quoted him describing:

We decided that we should go the way of accreditation and get some professional organizations to implement the first real projects. Otherwise, our country will become technologically backward.

What do you think of this ICO accreditation proposal? Let us know in the comments section below.


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Japan Cracks Down on Foreign ICO Agency Operating Without License

Japan Cracks Down on Overseas ICO Agency Operating Without a License

The Japanese financial regulator will be issuing its first warning since the legalization of cryptocurrencies as a method of payment in Japan. An overseas initial coin offering agency has reportedly been attracting Japanese investors without a license, repeatedly ignoring the agency’s advice to cease operating in the country.

Also read: Japan’s DMM Bitcoin Exchange Opens for Business With 7 Cryptocurrencies

FSA’s Warning

Japan’s Financial Service Agency (FSA) will issue a warning to an unregistered initial coin offering (ICO) agency, which has been conducting business in Japan without a license, Nikkei reported. The news outlet elaborated:

The warning will be issued to Blockchain Laboratory, based in Macau. The agency has decided the company’s activities could cause investors to incur losses. The FSA will work with the police and the Consumer Affairs Agency to bring criminal charges if the company fails to respond to the warning.

Japan Cracks Down on Overseas ICO Agency Operating Without a LicenseHeadquartered in Macau, “Blockchain Laboratory operates as an initial coin offering agency to raise funds using cryptocurrencies,” the publication described. The company’s activities include cryptocurrency and ICO consulting services and conducting seminars to attract investors.

The FSA has repeatedly advised the company to “halt its business activities in Japan, without success,” the publication detailed. According to the officials of the agency, the FSA “will warn the company directly, and name it on the FSA’s home page.” If the operator still fails to comply, criminal charges will be filed.

License Needed to Operate in Japan

Japan Cracks Down on Overseas ICO Agency Operating Without a LicenseSince the revised payment services law went into effect in April of last year, Japan has recognized cryptocurrencies as a legal method of payment. The law also requires crypto exchanges to register with the FSA. It “allows only registered operators, or those that have applied for registration, to operate in Japan,” Nikkei emphasized.

The warning to Blockchain Laboratory will be the FSA’s first under the revised payment services law. “The move is part of the FSA’s more aggressive scrutiny of the activities of unregistered operators in Japan,” the news outlet conveyed, adding that:

The revised law prohibits such unregistered exchanges from operating and soliciting in the country.

Currently, there are 16 cryptocurrency exchanges with a license to operate in Japan and another 16 are under review, including Coincheck which suffered a loss of 58 billion yen (~USD$533 million) in a recent hack.

In a recent interview with news.Bitcoin.com, Bitflyer CFO Midori Kanemitsu said:

Now people understand that they need to use safe exchanges, which are registered with FSA and have a high standard of security.

What do you think of the FSA’s action? Let us know in the comments section below.


Images courtesy of Shutterstock and the FSA.


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