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Robinhood Now Offers Cryptocurrency Trading in These Five States

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Popular stock trading app Robinhood has officially rolled out its cryptocurrency trading platform to users in five U.S. states, setting the stage for greater mainstream adoption of the digital asset class.

Robinhood Rolls Out Crypto Exchanges

As of Thursday, traders who pre-registered for Robinhood Crypto platform will receive emails inviting them to participate. As CCN reported last month, initial access to Robinhood Crypto will be limited to users in California, Massachusetts, Missouri, Montana and New Hampshire. One million users registered for the program in less than a week.

In a statement issued Thursday, Robinhood said:

“Over the past few weeks, we’ve been overwhelmed by the enthusiasm towards Robinhood Crypto and are excited to contribute to the cryptocurrency community in a meaningful way… With the release of Robinhood Crypto, we’re continuing our mission of making the financial system work for everyone, not just the wealthy.”

Designed for beginners, Robinhood has emerged as one of most popular trading apps on the market. In addition to cryptocurrencies, the platform offers access to stocks and exchange-traded funds (ETFs). The new crypto platform will not charge commission, but will include trading fees.

U.S. Exchange Regulation: Where We Stand

In the United States, cryptocurrency exchanges are regulated at the state level, which means they are not directly governed by the Commodity Futures Trading Commission (CFTC) or any other federal body. Exchanges must therefore apply for a license to operate in individual states. For example, San Francisco-based Coinbase has obtained licenses from 35 states, the District of Columbia and Puerto Rico, which is an unincorporated U.S. territory.

Federal securities regulators are nevertheless monitoring the cryptocurrency market for signs of fraud and suspicious behavior. In the case of the CFTC, regulators have investigative powers to subpoena exchanges like it did in December by summoning Bitfinex and Tether to court.

The commodity regulator has also issued a warning about pump-and-dump schemes involving cryptocurrency. The form of security fraud is becoming more common with the growth of mobile chat groups and internet message boards.

The CFTC has received criticism from the financial community after it granted CME Group and CBOE the right to launch bitcoin futures last December. The assets are seen by many as a precursor to greater mainstream adoption of the digital asset class.

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 601 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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Regulation

U.S. Federal Judge Says Initial Coin Offerings Fall Under Securities Laws

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A U.S. federal judge has ruled that initial coin offerings (ICOs) may fall under securities laws, handing regulators a major victory in their efforts to rein in the multi-billion-dollar crowdfunding industry.

Landmark Decision

The decision, which was handed down Tuesday by U.S. District Judge Raymond Dearie in Brooklyn, came in a case against Maksim Zaslavskiy, a fraudulent ICO promoter accused of raising money for assets that never existed. According to Bloomberg, the businessman was charged with conspiracy and two counts of securities fraud related to two coin offerings purportedly backed by investments in real estate and diamonds.

Zaslavskiy’s lawyer argued that the coin offerings in question were currencies and not securities, placing them outside the jurisdiction of the U.S. Securities and Exchange Commission (SEC). The businessman also said that securities laws are not clear enough to apply to ICOs.

“Per the indictment, no diamonds or real estate, or any coins, tokens, or currency of any imaginable sort, ever existed — despite promises made to investors to the contrary,” Dearie said, as quoted by Bloomberg. “Simply labeling an investment opportunity as a ‘virtual currency’ or ‘cryptocurrency’ does not transform an investment contract – a security – into a currency.”

While a jury will ultimately decide whether Zaslavskiy’s ICOs were securities, the indictment would support such a conclusion.

Zaslavskiy was charged in September 2017 for defrauding investors through several ICO scams, including REcoin, which was allegedly backed by real estate and diamonds.

SEC’s Jurisdiction

The ruling on Tuesday affirms the SEC’s long-standing position that coin offerings fall under federal securities laws. Previously, coin issuers had argued that there was a difference between “security” tokens and “utility” tokens.Under this classification, utility tokens fund the development of a project but are later used to purchase goods or services on the network. However, SEC Chairman Jay Clayton has repeatedly said he has not come across any coin offering that was not a security.

The agency uses the so-called Howey Test to determine whether an asset should be classified as a security. Using this as a baseline, an ICO is a security if it is an investment in money; invests in a common enterprise; expects to earn a profit; and whose profit is generated from the effort of others.

As a security, an ICO would have to satisfy provisions set forth by the SEC Investment Company Act of 1940 in order to raise funds. This means only accredited investors are eligible. What’s more, securities can only trade on regulated exchanges. To avoid getting bogged down by the SEC, many ICO projects have barred U.S. investors from participating in their crowdsale.

Roughly $7 billion has been raised this year by ICOs but funding has slowed considerably in recent months. The crowdfunding method raised in excess of $6 billion in all of 2017.

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 601 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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Market News

Reserve Bank of India Launches Cryptocurrency Research Unit

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India’s cryptocurrency saga has taken another unique turn. According to the Economic Times, the country’s central bank has established a new research unit dedicated to blockchain and cryptocurrency, a sign policymakers are exploring new pathways for regulating disruptive technologies.

Discreet Formation

Under the direct supervision of the Reserve Bank of India (RBI), the new research unit has been tasked with not only exploring emerging technologies but possibly draft rules for their implementation.

“As a regulator, the RBI also has to explore new emerging areas to check what can be adopted and what cannot,” an unnamed source told the Economic Times. “A central bank has to be on top to create regulations. This new unit is on an experimental basis and will evolve as time passes.”

Although the RBI confirmed as far back as September that research into cryptocurrencies was underway, officials have been heavily criticized for their lack of guidance in regulating digital assets. An information request submitted back in April found that the RBI implemented new cryptocurrency regulations without conducting research or consulting experts.

Since early July, state-regulated financial institutions have been barred from servicing digital currency exchanges and their lenders. The new regulation essentially stamps out fiat-to-crypto transactions. As Hacked reported earlier month, black market methods such as Dabba have rushed to fill the void.

Detailed Guidelines Expected

Public and anonymous sources close to the Indian government have confirmed that a blanket ban on cryptocurrency dealings is unlikely to continue in the future. Last month, a senior official from India’s Ministry of Finance confirmed that new cryptocurrency guidelines are already being developed and could be introduced as early as September. It has even been reported that digital assets may be regulated as commodities, which would allow authorities clampdown on money laundering.

A senior official with India’s Department of Economic Affairs had previously stated that a draft bill will be presented to lawmakers in early July. It is not yet clear whether policymakers have reviewed the proposed guidelines.

The future of India’s cryptocurrency market is up in the air as digital currency exchanges, traders and lenders await a final Supreme Court decision on the matter. In July, the Supreme Court upheld the RBI’s blanket ban on crypto dealings despite several exchanges petitioning to get it revoked. Exchanges argued that the RBI’s policy is arbitrary and unconstitutional.

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 601 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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Regulation

SEC Rejects Nine Bitcoin ETF Applications

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The U.S. Securities and Exchange Commission (SEC) on Wednesday rejected a total of nine proposals to list and trade bitcoin exchange-traded funds (ETFs), sending a strong signal that securitization of cryptocurrencies could be a long ways off.

Applications Denied

In three orders published on its official website, the SEC has denied applications by Direxion, ProShares and GraniteShares to bring bitcoin to market in ETF form. Unsurprisingly, the regulator cited fraud and manipulation concerns as the main reasons for the rejection.

In terms of breakdown, the agency rejected five proposed ETFs from Direxion, two from ProShares and an additional two from GraniteShares. However, in all cases, the SEC issued the following rationale:

“[T]he Commission is disapproving this proposed rule change because, as discussed below, the Exchange has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”

In addition to the above, none of the applications could convince the agency that the bitcoin futures market is of “significant size,” which is likely referencing underlying liquidity constraints.

Last month, the agency rejected for a second time a bitcoin ETF application submitted by Cameron and Tyler Winklevoss. However, the ruling didn’t go down lightly at the SEC, with Commissioner Hester Peirce formally objecting on grounds that it inhibits innovation in the sector.

Search for ‘Holy Grail’ Continues

Investors have become so preoccupied with the notion of a bitcoin ETF they’ve virtually ignored a multitude of positive developments tied to institutional trading and custody. Chief among them is the creation of Bakkt, a cryptocurrency holding company backed by Intercontinental Exchange, Starbucks and Microsoft, among others.

Although the latest rejections may seem like a setback, those in the know have long held the belief that a bitcoin ETF is unlikely to be approved this year. What’s more, none of the applications rejected on Wednesday offers quite the same advantages as the joint proposal submitted by VanEck and SolidX. The proposed VanEck SolidX Bitcoin Trust will be backed by physical bitcoin and insured against loss or theft.

The SEC has delayed its ruling on the VanEck application until Sept. 30. However, further delays are possible as the Commission reviews thousands of public comments related to the application.

Bitcoin markets held relatively steady following the announcement. The bitcoin price hovered around $6,415 on Bitfinex, having gained 0.8% during the session. At current prices, BTC accounts for 53.2% of the total cryptocurrency 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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4.6 stars on average, based on 601 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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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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