SEC’s Assessment Concludes that Ethereum is not a Security, IBM Joins Crypto Custody Business
U.S. Securities and Commission Exchange (SEC) Chairman Jay Clayton has written a letter to U.S. Rep. Ted Budd in which he agrees with Division of Corporate Finance Director Bill Hinman evaluation that Ethereum, the second largest digital asset by market cap, is not a security. Digital assets are considered to be securities if they were issued as an investment vehicle.
Clayton says that the type of offering depends on its character and not how it is described. He stated that a crypto’s asset distinction depends “on the facts and circumstances, including the economic realities of the transaction.”
Clayton wrote that if a “token is offered or sold as an investment contract, and therefore is an offer or sale of a security.
The Chairman also wrote that the character of a digital asset may change as time goes on. He said that a digital asset may be initially sold as a security because it was issued as an investment contract, but its designation may change over time if it no longer fits the definition of a security.
“I agree with Director Hinman’s explanation of how a digital asset transaction may no longer represent an investment contract if, for example, purchasers would no longer reasonably expect a person or group to carry out the essential managerial or entrepreneurial efforts. Under those circumstances, the digital asset may not represent an investment contract under the Howey framework,” further wrote the Chairman.
IBM indirectly enters the crypto custody business
IBM, an American multinational company with interests in the crypto sector is indirectly coming into the crypto custody business, reported CoinDesk.
A New York investment firm Shuttle Holdings is planning to launch a beta version for digital assets development on IBM’s technologies. The beta version is coming later this month. However, the two companies are not going to store any digital assets on the platform but are giving other entities tools to do so.
The new service is targeting users that include funds, family offices, brokers, banks, exchanges, and high-net individuals who want to store their digital assets, according to Brad Chun, the chief investment officer for Shuttle.
“We have a list of selected clients that we are launching limited service with this month,” said Chun.
The custody solution was showcased by IBM in San Francisco last month at the “Think 2019” conference.
This development is another clear sign that IBM is prepared to swim deeper in the crypto sector after it previously developed the Hyperledger Fabric enterprise blockchain designed for enterprises. The company is also working with the Stellar Foundation.
Crypto custody was formerly preserved for crypto exchanges and wallet providers but as more institutional investors enter the industry, more independent players are coming into the fold to provide industrial-grade solutions.
Bittrex exchange launches an Initial Exchange Offering (IEO) platform
Cryptocurrency exchange Bittrex International announced on March 11 that it is launching something similar to Binance Launchpad – a platform that helps new projects to host coin offerings.
The exchange said that it is hosting an Initial Exchange Offering (IEO) for RAID’s XRD token. RAID is an international game platform that leverages blockchain technology and creates new technology that rewards gamers.
Users can purchase XRD tokens using Bitcoin. This marks the first time that the Malta-based cryptocurrency exchange has hosted an IEO.
Bittrex CEO and founder Bill Shihara said that the latest development is a game changer.
“We are committed to increasing adoption and moving the blockchain revolution forward. The ability for projects like RAID to innovate, advance, and promote the gaming industry on our platform is a game changer for all involved,” said Shihara.
Bittrex is moving the footsteps of Binance’s Launchpad that has managed to revive investor interest in ICOs after hosting two successful coin offerings for BTT and Fetch.AI tokens.
Bittrex can use the latest service as a way of catching up with its rivals as its trading volumes decrease. Bittrex International is based in Malta where regulation is favorable towards crypto companies.
“And not just for RAID and our team. Now our international users have direct access to blockchain projects with the peace of mind that comes from Bittrex International regulated in Malta. We are excited for this IEO and look forward to helping similarly innovative teams connect with users to build their platforms for the future,” added Shihara.
Crypto OTC firm partners with Identity Mind for AML compliance
Over-the-counter (OTC) trading firm, Koi Trading announced on March 12 a partnership with IdentityMind in a deal that will see the trading platform implement Anti-Money Laundering (AML) procedures on its platform.
IdentityMind CTO Kieran Sherlock is excited at the opportunity of working with a company that is innovative as Koi Trading.
“They have created a new way for entrants into the digital currency space to be compliant from day one, and effectively serve their customers across different markets and geographies while minimizing their regulatory risk,” said Sherlock.
Koi Trading’s general counsel and chief compliance officer Harry Zhou believes that IdentityMind is the best company to work with in this area due to vast experience.
“IdentityMind’s immense experience in digital currency and their risk-based AML solutions enable Koi Compliance to provide the best technology-driven digital currency AML compliance services for exchanges, OTC desks, and stablecoin projects that face rapidly evolving regulatory landscapes around the world,” said Zhou.
Koi Trading secured an investment of $3 million from Binance Labs, the venture arm of cryptocurrency exchange Binance in January.
Andreessen Horowitz-backed Forte partners with Ripple to establish a $100 million gaming fund
Forte, a platform that provides blockchain-based solutions to the gaming industry has partnered with Ripple’s Xpring, a developer ecosystem initiative, to establish a $100 million fund to give support to game developers.
Forte has the backing of investors that include Andreessen Horowitz, Coinbase Ventures, Battery Ventures, etc. Individual investors include Fred Ehrsam (Coinbase co-founder), Balaji Srinivasan (Coinbase CTO and Earn.com co-founder), and Richard Lyons.
Xpring’s senior vice president Ethan Beard is thrilled with the partnership as he considers Forte to be a great team led by experts in the gaming industry.
“We are thrilled to partner with such a world-class team of game industry veterans,” said Beard.