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Can SAFTs Create a Self-Regulated Cryptocurrency Market?

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The Chinese government’s recent ban on initial coin offerings (ICOs) has reignited the debate on how crypto-assets should be regulated. In the United States, lawmakers are grappling to define ICOs from a tax, legal and securities perspective. To this day, no one is certain how this new crowdfunding model will be treated.

ICOs mirror initial public offerings by allowing companies to raise money via Ethereum-based token sales. Their growth has occurred in lockstep with the broader cryptocurrency market, which has seen enormous uptake since the start of 2017. However, the key challenge for market participants has been predicting how the regulatory environment will evolve to keep pace with crypto-based crowdfunding.

The murky regulatory environment surrounding token sales has hastened the need to bring the cryptocurrency ecosystem to maturity. Recognizing the limitations of existing frameworks, the crypto community came together to create standard legal agreements for the ICO market. These efforts led to the creation of the Simple Agreement for Future Tokens (SAFT) project, which aims to streamline the verification and investor accreditation process. The open source movement is uniting technology companies, legal experts and members of the blockchain community to converge on a framework that gives rise to a self-regulated cryptocurrency market.

The Rise of SAFT

In its simplest form, a SAFT promises investors future tokens at a fixed price. It can be structured so that investors receive their tokens when the network launches or via inbuilt vesting that encourages their continued support.

SAFTs were modelled after the Simple Agreement for Future Equity (SAFE) protocol, which was created by Y Combinator to reduce the complexity of funding early stage startups. Whereas SAFTs promise investors future tokens, the SAFE guarantees future equity.

While SAFTs certainly fall under the ICO umbrella, they are structured to provide much more regulatory certainty. This is what people mean when they say SAFTs are creating a self-regulated crypto market.

Unlike plain ICOs, which sell tokens to pretty much everybody, the SAFT structure limits participation to accredited investors as defined by Rule 506(c) of the SEC’s Regulation D. This list includes high net worth individuals, high-income earners and multi-million-dollar trusts, among others. This is the demographic to which SAFT is designed to serve. By meeting these and other requirements set out under Rule 506(c), startups can theoretically raise an unlimited amount of money via crowdfunding and advertise their sale over the internet.

Uniting the Blockchain Community?

Because SAFT is open source, it can be used by anyone. It’s therefore no surprise that a budding startup community leveraging SAFTs has already emerged. Their goal is to create a more secure way for investors to access the ICO market. This will serve as an important stopgap until new laws are crafted and implemented.

Members of the blockchain community have already encouraged regulators to join the SAFT movement. At the time of writing, the only ruling on digital coin offerings has come from the Securities and Exchange Commission (SEC). Earlier this year, the agency ruled that the tokens offered by ‘The DAO’, an ether-based venture capital fund, were securities and therefore subject to national securities laws. The SEC maintains that not every token will be defined as a security, but determined on a case-by-case basis.

Other regulators expected to chime in on the digital token debate are the Commodity Futures Trading Commission, Internal Revenue Service and the Financial Crime Enforcement Network. Internationally, financial regulators in Singapore, Hong Kong, Korea, Russia and Canada are also exploring whether ICOs should be regulated as securities.

Just How Big Have ICOs Become?

The amount of money raised by startups via initial coin offerings approached $800 million in the second quarter, data from CoinDesk recently revealed. By mid-2017, ICOs had already outpaced early venture capital funding. That’s a significant achievement given that ICOs were barely heard of just 12 months ago.

The growth and widespread adoption of ICOs mirrors the massive explosion in cryptocurrency over the past nine months. Before 2017, the cryptocurrency market was synonymous with Bitcoin, which was officially launched in 2008 as the brainchild of Satoshi Nakamoto, the person or entity who designed its original reference implementation. While Bitcoin continues to lead the pack in terms of overall capitalization, nearly a dozen altcoins have surpassed the $1 billion mark in the past few months. Ethereum is among those, and is currently ranked second in terms of overall capitalization. The crypto market is collectively valued at over $140 billion, although this figure is prone to wild fluctuations.

Bitcoin has been the world’s best-performing currency in six of the past seven years. As of early September, it appears likely that the cryptocurrency asset class will retain that title over fiat currencies.

The Beginnings of a Self-Regulated Market

The ICO ban initiated by China dealt a major blow to the cryptocurrency market, with ether prices plunging as much as 30% in the days following the decision. There’s a general fear that China’s attack on ICOs marks an end to the first era of digital token offerings. At first glance, the decision appears to have set a bad precedent for an industry still finding its footing.

At the same time, China’s unique context makes the ruling hardly surprising. Beijing has zero tolerance for any activity that will undermine its financial stability. This is especially true at a time when policymakers are steering their economy away from export- and investment-dependence toward a model that is based on services and consumption. The People’s Bank of China has already intervened in the cryptocurrency market on several occasions, probably as a backhanded attempt to manage capital flight from the country. (Cryptos are a popular way for mainland investors to diversify away from a volatile yuan, which fell to more than eight-year lows against the dollar in 2016.)

While the Chinese ban may stifle blockchain development in the short run, it will only embolden industry players to converge on a new model for self-regulating this space. From a regulatory perspective, the combination of identity verification and investor accreditation offered by SAFT has several advantages, including greater token compliance and more clarity for entrepreneurs. These features make SAFT well positioned to become the industry standard. By giving accredited investors an easy onboarding platform, SAFT opens token crowdfunding to a large segment of the market, leading to vastly greater adoption than we’ve seen through the early stages of the ICO hype.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 498 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Altcoins ADA, BAT, XLM, ZEC and ZRX Enjoy a Coinbase Pop

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The Ethereum price wasn’t able to hold onto its gains today despite seemingly marching toward the $500 level on Monday, as market technicians have predicted that the downward trend remains intact despite yesterday’s rally. Meanwhile, daily trading volume in the cryptocurrency market is hovering at about $13.8 billion compared to its 2017 peak of more than $50 billion, as per CoinMarketCap data cited in reports.

The more trading in digital currencies, the higher the revenue of bitcoin exchanges like U.S.-based Coinbase, which incidentally is in the process of adding a handful of altcoins. While it may seem that Coinbase’s answer to the weaker average trading volume these days is to bolster its platform with more coins, a leading exchange executive said that’s not the case. Coinbase Vice President and General Manager Adam White told CNBC that customer demand fueled the decision.

“Certainly volumes today are lower than they were at the end of Q4 and January. The idea behind adding new assets is very simple: our customers want it,” White said, adding that more than 20 million individuals are signed up on the exchange in addition to institutional investors, the latter of whom are demonstrating “unprecedented” interest in the space.

The assets that Coinbase is moving toward adding include Cardano (ADA), Basic Attention Token (BAT), Stellar Lumens (XLM), Zcash (ZEC) and 0x (ZRX). And while these coins are likely to be directed to the exchanges indexes, their presence does not reflect a bullish position on the part of Coinbase, White noted. Nonetheless, let’s take a look at each of them.

Cardano (ADA)

eToro exchange just published a report focused on Cardano, referring to the smart-contract-fueled platform as “Blockchain 3.0.” Cardano remains in the nascent stages but it’s designed to pick up where the Bitcoin and Ethereum networks fall short on scalability. ADA has advanced about 13% since Coinbase’s Friday announcement. But Cardano has shed more than three-quarters of its value since the beginning of the year.

Basic Attention Token (BAT)

Basic Attention Token describes itself as a “blockchain-based digital asset” startup. BAT is advancing more than 4% today and has been among the top performers since Coinbase announced plans to add the coin. BAT has added 33% to its value since the Coinbase announcement.

Stellar Lumens (XLM)

Stellar is advancing about 1% today and has tacked on about 28% since the Coinbase announcement. The coin also got a boost when the SEC Thailand said that Stellar would be an acceptable form of payment by iPO issuers. A Stellar follower on Twitter joked that soon XLM would be accepted at every McDonald’s.

Zcash (ZEC)

Privacy coin Zcash is up almost 2% today and its value has ballooned by 22% since the Coinbase announcement. ZEC was also added by fellow U.S.-based cryptocurrency exchange Gemini in recent weeks, so it has the tailwind of both listings.

0x (ZRX)

The thing about 0x is that it already had a relationship with Coinbase ahead of the listing announcement. So much of the enthusiasm for a listing may have already been baked into the price. ZRX is shedding some ground today, down about 1%, but it’s up about 48% since last week.

Disgruntled XRP Investors

Coinbase was accused by some XRP investors, a community that has been waiting for their Coinbase day in the sun, of price manipulation in the altcoin the exchange announced it’s exploring now.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 23 rated postsGerelyn has been covering ICOs and the cryptocurrency market since mid-2017. She's also reported on fintech more broadly in addition to asset management, having previously specialized in institutional investing. She owns some BTC and ETH.




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Dogecoin Price Surges 20% After Robinhood Listing

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Dogecoin has been one of the day’s biggest movers, climbing 20.8% and trebling its daily volume in the process.

Given that we’re dealing with DOGE, we’re going to have to make full use of our decimal places. This time last night one DOGE coin was trading at a price of $0.0024. Fast forward 24 hours and its value now stands at $0.0029 – that’s a 20.8% growth which has come fairly steadily over the last day, except for the brief spike which sent it to $0.0027 at 6pm (UTC) last night.

Today’s movement puts Dogecoin at 31.8% gains for the week, based on the $0.0022 starting point seven days ago.

Looking at DOGE’s monthly numbers, we see that it has now returned to the monthly high with its breach of the $0.0029 mark today. But as is always the case at this stage of a market downturn, such numbers require to be placed in the larger context. Three months ago, during the mild peak of April, one DOGE was worth $0.0058, meaning that even with today’s growth factored in, Dogecoin is still down 50% over the last 90 days.

Robinhood and DOGE

Recently launched crypto exchange, Robinhood, added Bitcoin Cash and Litecoin just last week, and now a press release has dropped which signals Dogecoin’s integration onto the Robinhood platform. As stated in the release:

“Starting today, you can invest in Dogecoin on Robinhood Crypto, commission-free. With last week’s announcement of Litecoin and Bitcoin Cash, you can now invest in five different cryptocurrencies on Robinhood.”

Robinhood is a U.S based exchange which offers compatibility with stocks and ETF trading, as well as cryptocurrencies. The service is only available in the U.S at the moment, but has not yet been rolled out across all states. According to Robinhood they are currently working on extending their reach beyond the current 17 states they have already.

“We’re working hard to make Robinhood Crypto available to everyone, and it’s currently available in 17 states: AZ, CA, CO, FL, IN, MA, MI, MS, MO, MT, NJ, NM, PA, TX, UT, VA, and WI.”

Beyond the Meme

Everyone will be somewhat familiar with DOGE’s humble beginnings in the crypto space, and many initially derided it for its seeming silliness and triviality.

Yet the community at large thought differently, and eventually DOGE grew in stature to become a regular fixture in the top-100 coins, and has taken its position just in front of the fire in the cryptocurrency living room.

During January’s peak DOGE reached a market cap of over $2 billion and a price of $0.0178. DOGE’s 11 billion circulating supply contributes to keeping its relative value down, but Dogecoin has often popped up as the most transacted cryptocurrency in existence at certain times, although not necessarily the most valuable.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 23 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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TenX Price Up 47%; Anomaly Detected on Bithumb Crypto Exchange

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TenX (PAY) was at the nice round number of one dollar last night before triggering a run which saw it spike to $1.47 by 2am (UTC). Since then the price has dropped back down to the $1.30 mark, but that still represents 30% gains for the day.

Just last week, TenX was priced at a value of $0.58 per token, with a market cap of $60 million. But in the last few days the PAY token has soared into the market cap top-100 and has hit 153% growth for the week. A daily volume of around $4 million at the start of the week has been replaced by peak volumes of $70 million over the last 24 hours.

The price may have dipped in the last few hours, but a glance at the daily volumes actually shows an increase, suggesting that TenX’s movements for the day aren’t over yet.

Bithumb Anomaly

PAY tokens were temporarily unable to be withdrawn on the Korean exchange Bithumb in the early hours of this morning. The lack of influx of new funds created a supply shortage on the platform, thus pushing the value of PAY tokens to a value of $7.32 – that’s a 632% growth in value, purely because of a temporarily disabled withdrawal system.

The volumes being traded on Bithumb amount to $200 million, and predictably all come in the form of direct trades between PAY and KRW (South Korean Won). That volume alone in 11 times the total recorded by CoinMarketCap at this given time.

Besides Bithumb, the most active exchange for TenX has been Upbit, followed closely by Bittrex, where BTC trades make up the vast majority. In fact, if we exclude the KRW trades from Bithumb (which we officially should) then we see that PAY/BTC trades make up over 75% of the total daily volume.

A History of Volatility

TenX’s overall charts make interesting reading. The ATH for PAY tokens was not in December-January as one might expect, but in August 2017 when one token was worth $5.33 and TenX had a market capitalization of half a billion. December’s peak, by comparison, only took PAY to a value of $5.00, but with the same market cap.

Barring a surge in April, TenX has been falling since January. Although the movements of the last two days may suggest a sudden change of sentiment. On July 16th, less than 48 hours ago, TenX was sitting at a price of $0.72. That means that it has grown by 104% since Monday.

Such movements usually trigger calls of the dreaded pump and dump, but TenX’s history shows a tendency for such dramatic movements, and this might just be par for the course. You can read more about TenX’s features here in this comparison against ICON.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 23 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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