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Regulation

Japan’s Mainstream Acceptance of Cryptocurrency Might Not Apply to ICOs

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Japan has quickly become the model for early adoption after regulators officially recognized bitcoin and other cryptocurrencies as legal tender. However, the same leeway may not apply to initial coin offerings (ICOs), the controversial but insanely popular crowdfunding model that has raised over $2.3 billion this year.

ICO Ban?

Koji Higashi, cofounder of IndieSquare and prominent figure in Japan’s cryptocurrency scene, believes a ban on ICOs is within the realm of possibility. Several news outlets, including Forbes, have quoted Higashi as saying that a ban on on ICOs is a “definite possibility.”

Japan, which now trades nearly two-thirds of bitcoin, still faces a tentative regulatory climate, says Higashi. In a country known for conservative bureaucracy, regulators could start cracking down on new coin offerings as soon as problems arise.

The ICO market has already had its fair share of scams, with fraudsters copying other public raises and presenting them as their own. Earlier this month, Hacked.com reported extensively about ToTheMoon, an ICO that ripped off Giga Watt right down to its whitepaper.

Investors looking to cash in on the next big thing are especially vulnerable, says Higashi. While not all ICOs are scams, many of them are clearly looking to capitalize on the hype.

The State of the ICO Industry

Token raises have generated billions of dollars in 2017. In the absence of regulation, the blockchain community to create a standard legal agreement for the ICO market. This effort led to the creation of the Simple Agreement for Future Tokens (SAFT) project, which attempts to standardize public raises by vetting ICOs and investors.

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. – Hacked.com (Sept. 21, 2017).

It remains to be seen whether SAFTs can step in to fill the void, or whether governments will move in to control the market. Blanket bans on ICOs have already been issued in China and South Korea.

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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4.7 stars on average, based on 773 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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Regulation

SEC Releases ICO Guidelines; Too Little, Too Late for Cryptocurrency Investors?

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The U.S Securities and Exchange Commission has released a guide for would-be cryptocurrency creators and investors; but a over a year on from the heady peak of the ICO craze, is it too little, too late?

SEC Offers ICO Guide

The SEC’s newly released guide to initial coin offerings features five main points, many of which will already be familiar to anyone keeping up with the SEC saga.

  • ICOs Can Be Securities Offerings

This one is hardly a surprise, however, it may be the first time that it has been stated officially by the SEC. Up until now all we had to go by were the ‘unofficial’ utterings of SEC figures at various talks and conferences.

“ICOs, based on specific facts, may be securities offerings, and fall under the SEC’s jurisdiction of enforcing federal securities laws.”

  • They May Need to Be Registered

ICOs that are securities most likely need to be registered with the SEC or fall under an exemption to registration.”

Another somewhat obvious statement, however, the vague wording present here suggests the SEC might not be completely sure on what qualifies as a security and what doesn’t.

  • Tokens Sold in ICOs Can Be Called Many Things

This is one aimed specifically at the ‘utility’ tokens out there, such as the recently reviewed Bitcoiin (B2G). When the New Jersey Securities Bureau slapped a cease and desist order on the B2G team, they responded by claiming they had no obligation to the Bureau due to the B2G token being a utility token, and not a security.

“ICOs, or more specifically tokens, can be called a variety of names, but merely calling a token a “utility” token or structuring it to provide some utility does not prevent the token from being a security.”

  • ICOs May Pose Substantial Risks

“While some ICOs may be attempts at honest investment opportunities, many may be frauds, separating you from your hard-earned money with promises of guaranteed returns and future fortunes. They may also present substantial risks for loss or manipulation, including through hacking, with little recourse for victims after-the-fact.”

  • Ask Questions Before Investing

The final point suggested by the SEC perhaps shows just how nebulous the entire space is right now. If 20% of the SEC’s big ICO guide is dedicated to ‘ask questions’, then maybe they don’t actually have much to say on the matter to begin with.

“If you choose to invest in these products, please ask questions and demand clear answers.”

Too Little, Too Late?

The difference between the cryptocurrency space this year compared to last year is night and day. In January of 2018 over $1.5 billion was raised via ICOs within the space of thirty days.

Fast forward to 2019, and that number stands at $30 million – a 98% drop off in twelve months. As is often the case with regulators, the SEC appears to be closing the stable door after the horse has bolted. That said, the process of reigning those horses back in (by ordering mass refunds, for example) could yet prove to be a messy one.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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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4.5 stars on average, based on 147 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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ETFs

As Race for Bitcoin ETF Heats Up, SEC Identifies Cryptocurrency as a Top Priority in 2019

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The crypto boom of 2017 caught federal regulators by surprise. The subsequent crash of 2018 forced them to closely examine the market, including the sale, trading and management of cryptoassets. Now, the U.S. Securities and Exchange Commission (SEC) is prepared to take a proactive approach to monitoring the nascent asset class at a time when more issuers are throwing their weight behind a crypto-backed exchange-traded fund (ETF).

Crypto Becomes a Priority

In the newly released 2019 Examination Priorities, the SEC’s Office of Compliance Inspections and Examinations (OCIE) has identified cryptocurrencies as one of six regulatory focal points this year. More attention and resources will be directed at the digital asset market due to its its rapid growth and perceived risks to retail investors.

“Given the significant growth and risks presented in this market, OCIE will continue to monitor the offer and sale, trading, and management of digital assets, and where the products are securities, examine for regulatory compliance,” the report said.

The regulator added that it will conduct high-level inquiries on market participants “offering, selling, trading, and managing these products…” Market participants include broker-dealers, trading platforms and investment advisers.

The report was released less than six weeks before the SEC is set to make a decision on a highly regarded bitcoin ETF. Although the agency has rejected more than a dozen crypto ETF applications, a joint proposal put forward by VanEck and SolidX is believed to have the best shot of being approved.

That’s because the proposed product includes safeguards to protect retail investors against fraud and manipulation. It also proposes to hold a repository of physical bitcoin as opposed to futures contracts and other derivative-based products. More on this story can be found here: SEC Delays Decision on VanEck SolidX Bitcoin ETF Until Next Year.

A crypto startup by the name of Bitwise Asset Management has also applied for bitcoin ETF product with the SEC. Like the VanEck-SolidX product, the Bitwise application is attempting to address the myriad of regulatory concerns put forth by the SEC in its previous rulings on crypto-backed ETFs.

If Bitcoin ETF Doesn’t Happen by February, How Will it Affect the Market?

Japan Not Considering Bitcoin ETF: FSA

Reports that Japan was considering approving a bitcoin ETF were quickly shot down this weekend by a spokesperson from the country’s Financial Services Agency (FSA). As Bitcoin.com and CCN report, the FSA representative said, “There is no such fact that we are considering approving ETFs which track crypto-assets at present. We are not currently considering approving them.”

Last week, Bloomberg and several other sources reported that Tokyo’s financial regulators were exploring the possibility of a crypto ETF tied to bitcoin futures. The speculation put the regulator in the same boat as the SEC, which has been reluctant to approve a bitcoin fund but has nevertheless invited public dialogue on the matter.

At present, Japan does not believe there is “constructive and social significant of trading cryptoassets derivatives,” the spokesperson said.

Japan was one of the first countries to approve and regulate cryptocurrency markets, but a series of high-profile attacks on domestic exchanges forced regulators to adopt more stringent measures. Exchanges have also come together to develop a self-regulatory group to prevent further attacks from undermining the market.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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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4.7 stars on average, based on 773 rated postsChief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi




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Altcoins

EOS Price Analysis: Cardano Founder Charles Hoskinson Warns of Regulatory Action Against EOS

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  • Charles Hoskinson projects some form of action from the SEC on EOS.
  • EOS/USD enjoys a relief rally on Wednesday, as price moves further north following recent bounce.

The EOS price hasn’t done much but decline of late. Back in August, EOS/USD entered into a very stubborn narrowing range. The price had been confined within this mode of trading right up until November. The range was seen from the $6 territory down $4 area. On the 19th November, EOS/USD bears had finally pushed for a breakout to the downside, from this mentioned range-block. Following this fall, the price plummeted over 60%, over the course of 3 weeks.

Cardano Founder Hoskinson Expresses EOS Regulatory Concerns

The Cardano (ADA) founder, Charles Hoskinson, has beliefs that EOS chief developer of the network is likely to face strong action from regulatory bodies. The SEC would be a potential regulator that investigates their $4bln ICO, as he has described as “egregious.”

Speaking at a press conference in Edinburgh, Charles Hoskinson has made a projection that the Securities and Exchange Commission will look at taking firm measures against Block.One. He believes that this would be done due to the way it had run and hosted the EOS ICO.  Hoskinson further detailed how the EOS token sale sits within the remit of the regulators for them to review the potential for harm of retail investors in the United States.

Charles Hoskinson Anticipating SEC Action on EOS

Hoskinson predicted that the SEC will likely bring punitive measures against Block.One for the way it ran the EOS Initial Coin Offering. The IOHK leader explained that EOS’ token sale falls well within the regulator’s remit to take action against any financial activity which harms US retail investors.

There were several fundamental issues with the EOS ICO, which clearly raise red flags, from Hoskinson’s view. He expressed for particular focus on the amount they had raised over the course of a year, in addition to their “utter lack of respect” for investors. Hoskinson said, the SEC “needed” to take action.

Technical Review – EOS/USD

EOS/USD daily chart

Most recently, the price has managed to stabilize, which could be due to sellers exhaustion. A bounce was seen on 7th December, after falling to a low of around $1.55. The bulls are attempting to make a convincing push back into the $2 territory. Demand in the near-term should now be observed from that recent low, $1.55 up to $1.80.

It is interesting to note the area of which EOS/USD received some comfort on 7th December (this is a known acting support). Back in November 2017 during the big bull run, the price consolidated within the mentioned demand zone for a brief period. This came before continuing its strong move to the north.

Downside Observations

EOS/USD daily chart

Should the near-term area of support fail to hold, then there could be some devastating moves to the downside. A breach of the $1 mark could very well be seen. The next major demand area will be within the depths of $0.90 region. EOS/USD had last traded down here again within the early part of Nov 2017 bull run.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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 125 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Hacked.com and its team members have pledged to reject any form of advertisement or sponsorships from 3rd parties. We will always be neutral and we strive towards a fully unbiased view on all topics. Whenever an author has a conflicting interest, that should be clearly stated in the post itself with a disclaimer. If you suspect that one of our team members are biased, please notify me immediately at jonas.borchgrevink(at)hacked.com.

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