Mastodon

BTC/USD and BTC/JPY Technical Analysis July 27, 2017

Hello and welcome to News BTC’s Market Outlook July 27. BTC/USD Bitcoin initially fell a bit during the day on Wednesday, but has found support at the 20 day moving average. The $2400 level has offered support, and thereby cause the market to bounce significantly. By doing so, it sets up a move above the … Continue reading BTC/USD and BTC/JPY Technical Analysis July 27, 2017

The post BTC/USD and BTC/JPY Technical Analysis July 27, 2017 appeared first on NEWSBTC.

Hello and welcome to News BTC’s Market Outlook July 27. BTC/USD Bitcoin initially fell a bit during the day on Wednesday, but has found support at the 20 day moving average. The $2400 level has offered support, and thereby cause the market to bounce significantly. By doing so, it sets up a move above the … Continue reading BTC/USD and BTC/JPY Technical Analysis July 27, 2017

The post BTC/USD and BTC/JPY Technical Analysis July 27, 2017 appeared first on NEWSBTC.

Philippines Government yet to Approve Cryptocurrency Exchange Applicants

Philippines Government yet to Approve Cryptocurrency Exchange ApplicantsPhilippine business press, Businessmirror, has reported that the government has been yet to approve a single virtual currency exchange application. The Philippine central bank, Bangko Sentral ng Pilipinas, introduced regulations for virtual currencies earlier this year – which focussed heavily on creating guidelines for the operations of cryptocurrency exchanges. Also Read: Philippines’ Central Bank Issues Guidelines […]

The post Philippines Government yet to Approve Cryptocurrency Exchange Applicants appeared first on Bitcoin News.

Philippines Government yet to Approve Cryptocurrency Exchange Applicants

Philippine business press, Businessmirror, has reported that the government has been yet to approve a single virtual currency exchange application. The Philippine central bank, Bangko Sentral ng Pilipinas, introduced regulations for virtual currencies earlier this year – which focussed heavily on creating guidelines for the operations of cryptocurrency exchanges.

Also Read: Philippines’ Central Bank Issues Guidelines for Virtual Currency Exchanges

The Philippine Central Bank Has Received Less Than 10 Applications For Virtual Currency Exchange Registration

 

Philippines Government yet to Approve Cryptocurrency Exchange Applicants

The Philippine Central Bank’s Supervision and Examination Sector told Businessmirror that it has not approved any applications for entities seeking to register and establish cryptocurrency exchanges. It has also been revealed that the Bangko Sentral ng Pilipinas (BSP) has so far received less than 10 applications.

BSP representative, Chuchi Fonacier stated that increased Filipino bitcoin adoption had prompted the development of cryptocurrency regulations. “We have observed acceleration in transaction volume based on our survey of top industry players last year, prompting us to institute a regulatory framework. We have no updated statistics to date, as these will come from the regular reports that registered entities will submit to the BSP.”

The Philipines’ bitcoin regulations focus upon articulating a juridical framework for the operation of cryptocurrency exchanges, in addition to providing an inclusive regulatory apparatus for cryptocurrency-based remittance services.“We want to maximize the benefits from this technological innovation, while adequately managing the risks that come with it. Virtual currencies can help accelerate the delivery of financial services [e.g., payments and remittance] and lower the cost of transactions, which is consistent with our broader financial-inclusion agenda,” Fonacier said.

In Practice, the Philippines’ Cryptocurrency Regulations Appear to Be Very Limited in Scope

Philippines Government yet to Approve Cryptocurrency Exchange Applicants

Officials have consistently iterated the Philippines’ government’s intention to simultaneously foster growth and innovation in the cryptocurrency industries, whilst restricting the risk of bitcoin being used for money-laundering or terrorist financing activities. “We are particularly keen on addressing money-laundering risk, that is why part of the responsibilities of a virtual-currency exchange is to comply with established anti-money laundering rules, such as know-your-client procedures, as well as proper reporting to the AMLC [Anti-Money Laundering Council].”

Despite local press describing the Philippines’ stance toward bitcoin as “a first of its kind in Asia”, the regulatory apparatus developed by the BSP appears to be limited in its scope. The regulations focus heavily on providing guidelines for the operation of virtual currency exchanges, yet have largely neglected to develop regulatory or taxation frameworks for general cryptocurrency use or mining. There has also been little effort made to promote and educate Filipino citizens about cryptocurrency, which will be vital for greater Filipino bitcoin adoption as only one in three Filipino citizens is reported to have access to the internet. Furthermore, the BSP has designed regulations so as to monitor the Filipino bitcoin economy through mandatory reporting submitted by virtual currency-based businesses – of which the BSP is yet to approve a single application.

Do you think that the Philippines’ virtual currency regulations are failing to attract and foster investment in the cryptocurrency industries? Share your thoughts in the comments section below!


Images courtesy of Shutterstock


Do you want to talk about bitcoin in a comfortable (and censorship-free) environment? Check out the Bitcoin.com Forums — all the big players in Bitcoin have posted there, and we welcome all opinions.

The post Philippines Government yet to Approve Cryptocurrency Exchange Applicants appeared first on Bitcoin News.

Ethereum Price Technical Analysis – ETH/USD Needs to Gain Momentum

Key Highlights ETH price lacked bullish momentum and was seen trading in a range around $200-205 against the US Dollar. There is a short-term contracting triangle pattern with resistance at $203 forming on the hourly chart of ETH/USD (data feed via SimpleFX). On the downside, the triangle support at $195 holds a lot of value … Continue reading Ethereum Price Technical Analysis – ETH/USD Needs to Gain Momentum

The post Ethereum Price Technical Analysis – ETH/USD Needs to Gain Momentum appeared first on NEWSBTC.

Key Highlights ETH price lacked bullish momentum and was seen trading in a range around $200-205 against the US Dollar. There is a short-term contracting triangle pattern with resistance at $203 forming on the hourly chart of ETH/USD (data feed via SimpleFX). On the downside, the triangle support at $195 holds a lot of value … Continue reading Ethereum Price Technical Analysis – ETH/USD Needs to Gain Momentum

The post Ethereum Price Technical Analysis – ETH/USD Needs to Gain Momentum appeared first on NEWSBTC.

Bitcoin Exchange Was a Nexus of Crime, Indictment Says – New York Times


New York Times

Bitcoin Exchange Was a Nexus of Crime, Indictment Says
New York Times
A Russian man was charged with overseeing a black market Bitcoin exchange that helped launder billions of dollars and stood at the nexus of several criminal enterprises, according to a federal indictment. The indictment, which was unsealed in
Bitcoin exchange chief arrested amid new questions about Mt Gox theftThe Verge
Bitcoin fraud suspect Vinnik charged by US grand juryBBC News
US indicts suspected Russian ‘mastermind’ of $4 billion bitcoin laundering schemeReuters
The Register –CoinTelegraph –WizSec –Reuters
all 53 news articles »

New York Times

Bitcoin Exchange Was a Nexus of Crime, Indictment Says
New York Times
A Russian man was charged with overseeing a black market Bitcoin exchange that helped launder billions of dollars and stood at the nexus of several criminal enterprises, according to a federal indictment. The indictment, which was unsealed in ...
Bitcoin exchange chief arrested amid new questions about Mt Gox theftThe Verge
Bitcoin fraud suspect Vinnik charged by US grand juryBBC News
US indicts suspected Russian 'mastermind' of $4 billion bitcoin laundering schemeReuters
The Register -CoinTelegraph -WizSec -Reuters
all 53 news articles »

Dash Price Technical Analysis – Can DASH/USD Break This?

Key Highlights Dash price remained above the $180 support versus the US Dollar and currently looking for more gains. There is a major bearish trend line forming with resistance at $198-199 on the hourly chart of DASH/USD (data feed from Poloniex). The price needs to clear the $200 handle to gain bullish momentum in the … Continue reading Dash Price Technical Analysis – Can DASH/USD Break This?

The post Dash Price Technical Analysis – Can DASH/USD Break This? appeared first on NEWSBTC.

Key Highlights Dash price remained above the $180 support versus the US Dollar and currently looking for more gains. There is a major bearish trend line forming with resistance at $198-199 on the hourly chart of DASH/USD (data feed from Poloniex). The price needs to clear the $200 handle to gain bullish momentum in the … Continue reading Dash Price Technical Analysis – Can DASH/USD Break This?

The post Dash Price Technical Analysis – Can DASH/USD Break This? appeared first on NEWSBTC.

Bitcoin fraud suspect Vinnik charged by US grand jury – BBC News

BBC NewsBitcoin fraud suspect Vinnik charged by US grand juryBBC NewsA Russian national has been charged by a US grand jury over the alleged laundering of billions of dollars using virtual currency Bitcoin. Alexander Vinnik, 38, was arrested in Greece …


BBC News

Bitcoin fraud suspect Vinnik charged by US grand jury
BBC News
A Russian national has been charged by a US grand jury over the alleged laundering of billions of dollars using virtual currency Bitcoin. Alexander Vinnik, 38, was arrested in Greece near the northern city of Thessaloniki on a US warrant. A US attorney ...
Bitcoin Exchange Was a Nexus of Crime, Indictment SaysNew York Times
Bitcoin exchange chief arrested amid new questions about Mt Gox theftThe Verge
Russian Bitcoin Launderer Indicted By US Jury After Getting Arrested In AthensNewsweek
The Register -WizSec -Reuters
all 66 news articles »

Bitcoin Price Technical Analysis for 07/27/2017 – Mid-Range Support Bounce?

Bitcoin price is stalling close to the mid-range area of interest, which happens to be bounded by a couple of Fib levels.

The post Bitcoin Price Technical Analysis for 07/27/2017 – Mid-Range Support Bounce? appeared first on NEWSBTC.

Bitcoin price is stalling close to the mid-range area of interest, which happens to be bounded by a couple of Fib levels.

The post Bitcoin Price Technical Analysis for 07/27/2017 – Mid-Range Support Bounce? appeared first on NEWSBTC.

Hacker Claims Responsibility for $50 Million Bitcoin Heist

hacker arrestedTheodore Price, a resident of Bucks County, Pennsylvania was arrested earlier today after a criminal complaint had been filed against him alleging he stole between $40-$50 million in Bitcoin by creating malware ridden bitcoin wallets and distributing them on the bitcointalk forums. The investigation started because of an alleged theft. According to his girlfriend, Price stole two laptops and a gold necklace from her parents’ residence when they were out on vacation. As police arrived to search the suspect’s apartment, they stumbled upon stolen personal information and credit card numbers with the girlfriend’s family members’ names on them. After his

hacker arrested

Theodore Price, a resident of Bucks County, Pennsylvania was arrested earlier today after a criminal complaint had been filed against him alleging he stole between $40-$50 million in Bitcoin by creating malware ridden bitcoin wallets and distributing them on the bitcointalk forums.

The investigation started because of an alleged theft. According to his girlfriend, Price stole two laptops and a gold necklace from her parents’ residence when they were out on vacation. As police arrived to search the suspect’s apartment, they stumbled upon stolen personal information and credit card numbers with the girlfriend’s family members’ names on them.

After his arrest, Price admitted to investigators that he was running a phishing scheme. Specifically, he compiled rogue bitcoin wallets and distributed them on specific bitcoin forums. Bitcointalk.org is notorious for scammers and hackers constantly trying to trick users into clicking their links so more likely than not the software was distributed on those forums. One of Price’s Bitcoin wallets contained roughly $35 million in stolen funds, he even told investigators that he was planning to launder the money to make it spendable.

While Price was initially charged with the appropriate charge of “unauthorized access to a computer for personal financial gain between $40-50 million,” the charges were subsequently dropped according to assistant U.S. Attorney Lesley Bonney. While it is unclear why the charge was dropped, it is obvious that Price fully cooperated with police and gave up his bitcoin wallets. After all, seizing $40 million in cryptocurrency in exchange for a plea deal doesn’t seem like such a bad deal.

The real question is why in the world did Price steal his girlfriend’s parents property when he was sitting on millions dollars worth of cryptocurrency? According to the complaint, Price sold his girlfriend’s laptop for $150 at a computer store and had the rest of the stolen property in his possession.

According to Emin Fun Sirer, a Cornell University computer science professor:

“The bitcoin ledger is public, it’s virtually impossible to spend large amounts of stolen bitcoin without being noticed. Most hackers use a process called “tumbling” to launder stolen bitcoin by intermingling it with other people’s transactions, but the complaint says Price didn’t have a chance to do that. It makes sense that someone could steal $40 million, but not be able to pull it out.”

However, I would argue that Price could have easily separated a smaller portion of his bitcoins into a different wallet which wouldn’t link to the main one, then tumble the small amount of bitcoins and spend them to his heart’s content.

I believe the real reason why Price stole property from his girlfriend’s parents’ house stems from either personal or relationship issues. Maybe Price was mad at his girlfriend for something she did, maybe he didn’t like her parents and wanted to get revenge on them. It is also surprising that he would create fraudulent credit cards under their names when he could have used the name of any other random person.

At the end of the day, Karma is a bitch, the tables turned and instead of making $150 from innocent people he just caught a charge and lost over $40 million to the federal government.

Tim Draper Speaks on SEC Securities Decision

In an open letter to the SEC via Facebook, venture capitalist Tim Draper spoke about the recent SEC decision regarding DAO tokens as securities.

In an open letter to the SEC via Facebook, venture capitalist Tim Draper spoke about the recent SEC decision regarding DAO tokens as securities.

Greek Authorities Arrest Suspected BTC-e Mastermind for Laundering $4 Billion

Greek Authorities Arrest Suspected BTC-e MastermindSuspected BTC-e mastermind, Alexander Vinnik, was arrested on Wednesday whilst vacationing with his partner in Northern Greece. The 38-year-old Russian is suspected of directing a criminal organization accused of laundering over $4 billion through BTC-e since 2011. Accusations of Vinnik’s involvement in laundering bitcoins that were stolen during the devastating hack that resulted in Mt.Gox’s […]

The post Greek Authorities Arrest Suspected BTC-e Mastermind for Laundering $4 Billion appeared first on Bitcoin News.

Greek Authorities Arrest Suspected BTC-e Mastermind

Suspected BTC-e mastermind, Alexander Vinnik, was arrested on Wednesday whilst vacationing with his partner in Northern Greece. The 38-year-old Russian is suspected of directing a criminal organization accused of laundering over $4 billion through BTC-e since 2011. Accusations of Vinnik’s involvement in laundering bitcoins that were stolen during the devastating hack that resulted in Mt.Gox’s insolvency are also mounting.

Also Read: Global Police Operation Undermines Darknet Markets

BTC-e Is Currently Offline, Hosting a Static Front Page Displaying the Message “Site Is Under Maintenance. We Apologize for the Inconvenience.”

Greek Authorities Arrest Suspected BTC-e Mastermind

A 38-year-old Russian man has been arrested in Northern Greece for his suspected role in the operation of the shadowy bitcoin exchange BTC-e. The man, Alexander Vinnik, is accused of having facilitated the laundering of over $4 billion worth of bitcoin since 2011. Vinnik is currently in the custody of the Thessaloniki Court of Appeals, pending an application for his extradition to the United States to commence.

BTC-e is currently offline, hosting a static front page displaying the message “Site is under maintenance. We apologize for the inconvenience.” Updates are being provided via the exchange’s Twitter account.

The arrest was carried out by Greek authorities working in partnership with US agencies. The FBI had been surveilling Vinnik for over a year, as documents pertaining to his arrest make reference to a Webmoney account that was accessed from a luxury Abu Dhabi hotel in May 2016. Electronic equipment is reported to have been seized from his hotel room.

Evidence Is Compiling Linking Vinnik to the Mt.Gox Hack That Saw $2.1 Billion Worth of Customers’ Bitcoin Stolen

Greek Authorities Arrest Suspected BTC-e Mastermind

Greek have police made an official statement regarding the arrest, stating that “an internationally sought ‘mastermind’ of a crime organization has been arrested. Since 2011 the 38-year-old has been running a criminal organization which administers one of the most important websites of electronic crime in the world.” The US Department of Justice has described BTC-e as “one of the largest entities in the field of electronic money laundering and money laundering in the world”, stating that the company’s “illegal proceeds come from a number of high-level piracy, ransom repayment systems, drug trafficking and tax systems”.

Evidence is also compiling that links Vinnik to the infamous of Mt.Gox hack that saw approximately $2.1 billion worth of customers’ bitcoin stolen. Wizsec claims that approximately 300,000 bitcoin stolen in the hack was laundered via BTC-e. Crucially, their reports suggest that many of the stolen bitcoins were immediately moved from wallets owned by Vinnik to BTC-e internal storage, rather than customer deposit wallets. Similar patterns have also been identified in the circulation of bitcoin “stolen from Bitcoinica, Bitfloor and several other thefts from back in 2011 and 2012.”

Do you think that Vinnik will be extradited to the United States? Share your thoughts in the comments section below!


Images courtesy of Shutterstock


Play with confidence! We guarantee that every Video Poker game you play at BitcoinGames is completely fair. You will be dealt a completely random deck of cards every game, and we can provably demonstrate that we have in no way manipulated the game. 

 

The post Greek Authorities Arrest Suspected BTC-e Mastermind for Laundering $4 Billion appeared first on Bitcoin News.

Cryptocurrency Market Resilient As Bitcoin Approaches Potential … – Forbes

ForbesCryptocurrency Market Resilient As Bitcoin Approaches Potential …ForbesCryptocurrency markets have remained resilient, even as bitcoin, the largest crypto, approaches a possible hard fork.Bank Of America Warns Against Optimism over BitcoinCrypt…


Forbes

Cryptocurrency Market Resilient As Bitcoin Approaches Potential ...
Forbes
Cryptocurrency markets have remained resilient, even as bitcoin, the largest crypto, approaches a possible hard fork.
Bank Of America Warns Against Optimism over BitcoinCryptoCoinsNews

all 4 news articles »

Bankers Outgrow Legacy Finance and Join the Cryptocurrency Space

BankersAs global regulatory watchdogs eye cryptocurrency with increasing suspicion, bankers continue retreating from legacy finance. They are leaving to embrace the titillating comeuppance of cryptocurrency. They see the digital token ecosystem as a sumptuous feast of unimaginable prosperity for themselves and the world. Also read: Litecoin ATMs Proliferate Globally A recent article by Bloomberg reported that China […]

The post Bankers Outgrow Legacy Finance and Join the Cryptocurrency Space appeared first on Bitcoin News.

Bankers

As global regulatory watchdogs eye cryptocurrency with increasing suspicion, bankers continue retreating from legacy finance. They are leaving to embrace the titillating comeuppance of cryptocurrency. They see the digital token ecosystem as a sumptuous feast of unimaginable prosperity for themselves and the world.

Also read: Litecoin ATMs Proliferate Globally

A recent article by Bloomberg reported that China Renaissance investor Richard Liu sacrificed a 7 figure salary to focus on bitcoin and cryptocurrency, especially initial coin offerings (ICOs).

Bankers Outgrow Legacy Finance and Join the Cryptocurrency Space

In the Bloomberg piece, Liu says traditional banks and VC’s need to pay especially close attention to ICO’s. Liu has already backed about 20 ICO’s, including Tezos, which raised $200 million. Liu seemed especially proud of how there are few blockades in the industry and little impediments from regulators. He implied the future is bright, saying:

Unlike the traditional financial sector, there are no ceilings or barriers. There’s so much to imagine.

Bankers Leaving Their Careers for Crypto-Related Opportunities is Nothing New

Bankers ditching their old Wall Street or banking careers, however, is not a new phenomenon. Most crypto enthusiasts are familiar with Blythe Masters of JP Morgan. She was seen as a “banking prodigy” and pioneered credit derivatives. In March 2015, she quit her job as an executive at JP Morgan to start Digital Assets Holding.

Bankers Outgrow Legacy Finance and Join the Cryptocurrency Space

Another individual who worked for the banking industry, Justin Short, quit his career to begin bootstrapping his own crypto-related startup called Nous. Previously, Short created electronic trading algorithms for Bank of America. His project, Nous, is supposed to be a token-backed crypto asset portfolio manager.

Nikolay Storonsky — who helped found the London startup Revolut — was also deeply embedded in legacy finance. He was a former trader with Credit Suisse when he had a flashbulb moment. He realized that costs of foreign transactions were hopelessly archaic. This led him to help create Revolut, which will purportedly help the fintech industry move beyond banking. Storonsky has spoken candidly about his feelings toward banking.

I just don’t like banks. They’re so bureaucratic, with so many managers not really doing anything … If you fired 80 percent of bankers, nothing would change.

Regulatory Scrutiny Intensifies as Bankers Pivot

Even though these former bankers appear ambitious to taste the sweet fruit of the crypto space, regulators are now preparing to pounce on the ecosystem. As bitcoin.com recently reported, SEC has declared some digital tokens might meet the definition of a security and be subject to Federal Security Laws. Kevin Helms, writing for bitcoin.com, reported:

“The U.S. Securities and Exchange Commission (SEC) has announced that Initial Coin Offerings (ICOs) and token sales are subject to federal securities laws. The announcement follows a report based on an investigation into The DAO’s token sale in 2016, in which the Commission found DAO tokens to be securities.”

Nonetheless, it is optimistic to see bankers pivoting as the cryptocurrency ecosystem gets riled up by SEC’s ominous warnings. All these happenings foretells the coming of an interesting future for the cryptocurrency community.

Bankers Outgrow Legacy Finance and Join the Cryptocurrency Space

Do you foresee more bankers exiting legacy finance and joining the cryptocurrency space? Let us know in the comments section below.


Images courtesy of Shutterstock.


Bitcoin is a decentralized digital currency that enables near-instant, low-cost payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer technology to operate with no central authority: transaction management and money issuance are carried out collectively by the network. Read all about it at wiki.Bitcoin.com.

The post Bankers Outgrow Legacy Finance and Join the Cryptocurrency Space appeared first on Bitcoin News.

SEC Weighs In on ICO Tokens as Securities; Ether Still Labeled “Currency”

SEC vs ICO tokens

It was only a matter of time before the U.S. Securities and Exchange Commission (SEC) moved in on the “Wild West” world of Initial Coin Offerings (ICOs), which has sent the blockchain world reeling. Yesterday, it finally did with its announcement that virtual tokens like the ones sold by the DAO are securities and now subject to federal securities laws.

The SEC statements reads in part: “federal securities laws apply to those who offer and sell securities in the United States, regardless whether the issuing entity is a traditional company or a decentralized autonomous organization, regardless whether those securities are purchased using U.S. dollars or virtual currencies, and regardless whether they are distributed in certificated form or through distributed ledger technology.”

The SEC is cautioning investors not only to be aware of the risks but also to ensure that those looking to get involved do their own due diligence as well.

One important distinction that seems to have emerged in the report, however, is that while DAO tokens are securities, Ether itself is still in the clear.

The Report seems to distinguish between Ether, labeled a virtual currency, and DAO Tokens, labeled a security. Market participants may take comfort in this distinction, as it supports the view that not all blockchain tokens are securities under the U.S. Federal Securities Laws. – Devebois & Plimpton LLC

The announcement, nevertheless, is expected to have an impact on token sales. As a result of this recent development, it is important to note that any company looking to raise capital through ICOs in the U.S. will have to take this SEC decision into consideration.

On the legal side, Mark Radcliffe of DLA Piper told Bitcoin Magazine: “Those considering a token offering would be well served to reconsider their plans and ensure compliance in all of these areas, from tip to tail.”

Radcliffe said: “The SEC’s release is most notable on its survey of many of the corollary issues which can be triggered under the federal securities laws when a token is deemed a security, from registration or exemption, whether general solicitation is permissible, to crowdfunding, to after-market trading and even addressed compliance issues under the 1940 Act.”

What Is “The Howey Test”?

The Howey test is the leading definition of an investment contract, referring to the U.S. Supreme Court case SEC v. W.J. Howey Co. Under the Howey test, an investment contract is “a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.”

According to Jaron Lukasiewicz, CEO of stealth blockchain project WORKFLOW and former investment banker, “The standard test is an investment in a business where the buyer has a reasonable expectation of profits based on the efforts of others. It should come as no surprise that the SEC found that buyers of the DAO Token purchased a security.”

He explained that the key feature of the DAO token was indeed an expectation of profit if the investments made by the DAO were successful, and so DAO tokens were expressly sold as an investment.  

Lukasiewicz added: “Unlike a token such as Ether, the DAO token had no other utility.  Many people in the industry at the time were concerned about the DAO for the reasons stated by SEC.”

Marco Santori, partner at Cooley LLP and legal ambassador for the Delaware Blockchain Initiative, shared an excellent summary of the report’s key points on Twitter, touching chiefly on the distinction between tokens that are and are not securities.

santori screenshot

Arnold Spencer acts as general counsel for the Coinsource network of Bitcoin ATMs. He summed up the distinction in a succinct analogy:

If you buy an interest in a golf course to make money from the business, it is a financial investment and therefore a security. If you join a golf club to play golf, it is not a financial investment and not a security.

Important — but Not Surprising

Ron Chernesky, CEO of social trading platform investFeed, said that he welcomes the SEC announcement, although he also noted that “before yesterday’s announcement, it was common knowledge that ICOs have been enveloped in a regulatory [gray] area.”

It would appear that that gray area has now shrunk somewhat.

The post SEC Weighs In on ICO Tokens as Securities; Ether Still Labeled “Currency” appeared first on Bitcoin Magazine.

SEC vs ICO tokens

It was only a matter of time before the U.S. Securities and Exchange Commission (SEC) moved in on the “Wild West” world of Initial Coin Offerings (ICOs), which has sent the blockchain world reeling. Yesterday, it finally did with its announcement that virtual tokens like the ones sold by the DAO are securities and now subject to federal securities laws.

The SEC statements reads in part: “federal securities laws apply to those who offer and sell securities in the United States, regardless whether the issuing entity is a traditional company or a decentralized autonomous organization, regardless whether those securities are purchased using U.S. dollars or virtual currencies, and regardless whether they are distributed in certificated form or through distributed ledger technology.”

The SEC is cautioning investors not only to be aware of the risks but also to ensure that those looking to get involved do their own due diligence as well.

One important distinction that seems to have emerged in the report, however, is that while DAO tokens are securities, Ether itself is still in the clear.

The Report seems to distinguish between Ether, labeled a virtual currency, and DAO Tokens, labeled a security. Market participants may take comfort in this distinction, as it supports the view that not all blockchain tokens are securities under the U.S. Federal Securities Laws. – Devebois & Plimpton LLC

The announcement, nevertheless, is expected to have an impact on token sales. As a result of this recent development, it is important to note that any company looking to raise capital through ICOs in the U.S. will have to take this SEC decision into consideration.

On the legal side, Mark Radcliffe of DLA Piper told Bitcoin Magazine: “Those considering a token offering would be well served to reconsider their plans and ensure compliance in all of these areas, from tip to tail.”

Radcliffe said: “The SEC’s release is most notable on its survey of many of the corollary issues which can be triggered under the federal securities laws when a token is deemed a security, from registration or exemption, whether general solicitation is permissible, to crowdfunding, to after-market trading and even addressed compliance issues under the 1940 Act.”

What Is “The Howey Test”?

The Howey test is the leading definition of an investment contract, referring to the U.S. Supreme Court case SEC v. W.J. Howey Co. Under the Howey test, an investment contract is “a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.”

According to Jaron Lukasiewicz, CEO of stealth blockchain project WORKFLOW and former investment banker, “The standard test is an investment in a business where the buyer has a reasonable expectation of profits based on the efforts of others. It should come as no surprise that the SEC found that buyers of the DAO Token purchased a security.”

He explained that the key feature of the DAO token was indeed an expectation of profit if the investments made by the DAO were successful, and so DAO tokens were expressly sold as an investment.  

Lukasiewicz added: “Unlike a token such as Ether, the DAO token had no other utility.  Many people in the industry at the time were concerned about the DAO for the reasons stated by SEC.”

Marco Santori, partner at Cooley LLP and legal ambassador for the Delaware Blockchain Initiative, shared an excellent summary of the report’s key points on Twitter, touching chiefly on the distinction between tokens that are and are not securities.

santori screenshot

Arnold Spencer acts as general counsel for the Coinsource network of Bitcoin ATMs. He summed up the distinction in a succinct analogy:

If you buy an interest in a golf course to make money from the business, it is a financial investment and therefore a security. If you join a golf club to play golf, it is not a financial investment and not a security.

Important — but Not Surprising

Ron Chernesky, CEO of social trading platform investFeed, said that he welcomes the SEC announcement, although he also noted that “before yesterday’s announcement, it was common knowledge that ICOs have been enveloped in a regulatory [gray] area.”

It would appear that that gray area has now shrunk somewhat.

The post SEC Weighs In on ICO Tokens as Securities; Ether Still Labeled “Currency” appeared first on Bitcoin Magazine.