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State of Securities: Token Regulation and Solutions

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Over the past year and a half we have witnessed an incredible volume of international news and speculation, much of which regarding the matter of government authorities and their attempts to implement regulatory measures / controls on cryptocurrencies.

Not since the advent of digital payment services (from PayPal, to Revolut and mobile-only banks) have we seen phenomenon affecting finance in such a revolutionary way.

Blockchain is still a nascent technology however, and to liken it to previous innovations (backed by the old guard of central-banking titans) would be to do it a disservice.

Millenials and ‘The Crypto Rush’

In today’s economy, throughout much of the western world, we have experienced a challenge that has widely been referred to by many names. We’re going to call it ‘the millennial problem’.

It denotes the differences seen between the economic and professional opportunities that were available to past post-WW2 generations (such as ‘baby boomers’) and those offered to the young adults of today.

Generations which have grown up and lived through the new millennium as young adults.

It is not unreasonable to make the comparison between the desperation for fortune of today’s disenfranchised youth in light of blockchain – to that during the successive gold rushes in the 18th and 19th centuries across North America.

Regulation: What is it good for?

Like the days of the wild west (admittedly with less violence!), there is little to no effectively implemented regulation in much of the current crypto sector…

Regulation is important because it helps to protect unsuspecting individuals from being taken advantage of by the likes of confidence tricksters, scammers, and other types of fraudsters that are rife in the ICO market.

It is also important to implement appropriate and functional controls like KYC and AML (‘Know Your Customer’ and ‘Anti-Money Laundering’) to successfully combat activities such as money-laundering

Such illicit practices have been known to be used by criminal groups and terrorist organisations.

Security Tokens: Difficulties of Definition

Source: Smithandcrown.com

According to a piece published by Nasdaq in January 2018, there are three primary types of cryptocurrency which you need to know about.

‘Transactional’, ‘utility’ and ‘platform’.

They give little attention to the fact, however, that tokens can also fulfill functions of assets or company shares.

These are often referred to as ‘security tokens’ and they should be considered as something of an investment contract. They are considerably more difficult to regulate and, as of late, have been subject to great scrutiny and critique.

Furthermore, roughly 98% of ICOs launched are considered to be security tokens. This metric is exacerbated by the fact that the the United States Securities and Exchange Commission (AKA the ‘SEC’) has been heavily investigating ICOs of late.

Furthermore, their chairman Jay Clayton appears to believe that every ICO he has seen is a security, remarking that he wants:

“to go back to separating ICOs and cryptocurrencies. ICOs that are securities offerings, we should regulate them like we regulate securities offerings. End of story.”

The Benefits of Security Tokens

There are many primary and secondary uses to security tokens.

The most prominent is to provide an opportunity to contributors for investing in various projects, with the expectation of future profits. These may be delivered via dividends, revenue share or, most commonly: price appreciation.

Secondary trading (as well as liquidity) is vastly diminished as well for security tokens as this ruling could limit or damage the platform, ecosystem and network they are built upon.

Additionally, for coins that fall within the ‘securities’ classification: there are heightened legal risks, duties and obligations that the issuer must consider.

Market, Industry & Regulator Challenges

Source: Cryptocompare

Many believe that this year’s announcement of regulatory implementation in the US was largely responsible for this years record market crash.This comes alongside news and uncertainty surrounding East and South-East Asian regulation activities.

To this day, we still haven’t managed to recover fully from this drop.

Understanding new and culturally disruptive technologies has infamously been one of the weaker suits of many governments across the world, when compared to industry and this is no different when it comes to cryptocurrencies.

Regulations Worldwide

We have seen how easy it is for countries to make decisions, without fully appreciating the extent of the their consequences.

As such, another problem is that many fear that governments will not implement regulations properly due to this lack of understanding.

From China for example, have implemented an outright ban of security tokens and ICOs. Just across the border, however, they are much more legal as Hong Kong is a ‘crypto haven’ – much like Singapore and Taiwan.

Additional concerns come from the effects which these regulations will have on blockchain as an industry, in addition to public fears of wasting tax-payer funding on failed initiatives.

Is 2018 The Year of the Security Token?

It should be repeated that there are considerable benefits to the security token structure, with far eaching ones coming from ICO operator issue security tokens under regulatory frameworks.

Take Regulation A+, Regulation D, Regulation S and Regulation Crowdfunding. Each of which offers its own respective and far-reaching benefits, and while these security-token frameworks are still strict: they allow for ICOs to be conducted in a cheaper and faster way than utility tokens. They also greatly help to reduce legal risk / liability.

Such regulations are a clear example of a government implemented approach, however there are also blockchain based organisations which are developing their own solutions in parallel.

Regulation in the USA (‘The ‘Howey Test’)

No matter your opinion regarding the the US government’s SEC deciding to rule all ICOs as securities, the authority has clealy shown themselves to be a pro-active proponent in the definition of distinct standards for crypto tokens.

In order to help educate their own domestic investors, the Securities and Exchange Commission created what they call the ‘Howey Test’ which helps to educate investors in determining if paritucular transactions can be classified as “investment contracts”.

It is exists alongside a mock ICO called ‘HoweyCoin’, which Josiah Wilmoth (over at our sister site CCN) deemed:

“a landmark embrace of technological innovation,”

and

“a clever campaign intended to teach investors how to identify ICO scams – and troll the fraudsters who continue to operate them.”

The United States of America is home to a great number of projects, however funding processes crypto investment (such as ICOs) are subject to strict limitations.

A result is that many crowd-sale operators opt to refuse US investors at KYC level.

Industry and Community Solutions (‘MOBU’ and more)

Industry lies on the other side of the coin, with inherent features of blockchain such as decentralized decision making.

Projects such as start-up ‘MOBU’ combine a number of these features with proprietary tools and assets with the hopes of becoming greater than the sum of its parts. The end-goal is meant to be to provide an alternative, yet (potentially) compatible solution to those provided by government authorities / think-tanks.

MOBU is a ‘self-regulating’ platform which facilitates the release of compliant security tokens on the blockchain and, according to the platforms whitepaper, it offers Know-Your-Customer (KYC), Anti-Money Laundering (AML) and SEC approval.

Seemingly, the platform / team (according to their whitepaper) intends to bridge a gap. To close the distance between the cryptocurrency developers seeking to offer security tokens, and actual release of said coins: compliantly, legally and successfully.

Final Thoughts

Considering the real use cases, and ability to denominate value, security tokens could rankle traditional financial markets, with a favourable hybrid model from blockchain projects like the aforementioned.

Even more so when considering the news that Nasdaq has begun incorporating blockchain: into public company listings and via it’s Linq platform!

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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Tron Price Analysis: TRX/USD Constructing a Head and Shoulders Pattern

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  • TRX/USD remains vulnerable to further downside, with eyes on the possible head and shoulders technical structure.
  • TRX/BTC bulls are having much difficulty breaking down huge area of supply.

TRX/USD Price Action

TRX/USD daily chart.

There has been little in terms of committed market direction. It appears that after the huge bull run, which was observed from mid-December until 10th January, the price is trying to find its feet again. The gains of that push higher were a chunky 180%, before quickly becoming unstable and losing some of that ground.

Head and Shoulders Pattern

TRX/USD head and shoulders formation, via daily chart.

A near-term ascending trend line can be observed via the daily chart. This could be forming a head and shoulders formation. The left shoulder and head have already been constructed, with attention on this possible right shoulder. It is currently moving back towards the trend line, acting as a neckline for the technical pattern. A breach could see a fast fall below the $0.020000 mark.

The next major area of support is seen at a demand zone, which tracks from $0.017500 down to $0.016000. TRX/USD last traded here on 20th December, when the bulls ran through this range, which at the time was acting as supply. At a worse case scenario, a failure of this zone holding will shift attention to the December low area, $0.011150.

TRX/BTC Bulls Cannot Break Down Big Supply Zone

TRX/BTC daily chart.

This trading week, the TRX/BTC bulls attempted on a few occasions,to break down heavy area of supply. It can be seen tracking from 0.00000700 up to 0.000007500. The price has not been convincingly breached since June 2018, a strong sign of the bearish trend gripping the market. Briefly on 10th January, an aggressive spike to the upside was observed, pushing above for a very short-time before the sellers piled in.

Weekly Chart

TRX/BTC weekly chart.

Looking via the weekly chart view, TRX/BTC has been pushing higher for the past three consecutive weeks, at the time of writing. Despite this run of gains, the technical picture does still somewhat express some vulnerabilities. The large upper wick produced during the week which commenced 7th January appears to be a bearish pin bar formation.

If this week fails to close in the green, it could suggest that a larger wave of selling pressure may materialize. Typically, the types of candlesticks described above tend to come ahead of downside pressure. In addition, then numerous rejections seen within the earlier detailed supply zone, stacks favorably for the bears.

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 110 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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Monero Price Analysis: Stronger Malware to Mine Monero; XMR/USD Has Room for Another Potential Squeeze South

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  • Researchers: a stronger malware has been uncovered, which can mine Monero.
  • XMR/USD price action remains stuck in a narrowing range, subject to an imminent breakout.

The XMR/USD price has seen some upside on Saturday, holding gains of around 3% towards the latter stages of the day. Despite the press higher from the bulls, a move which has been observed across the cryptocurrency market, vulnerabilities remain. Price action has been ranging for the past nine sessions. Once again, this isn’t specifically just XMR, as this type of behavior is witnessed across the board. The narrowing in play came after the steep drop that rippled across the market on 10th January.

Price action was initially well-supported to the upside by an ascending trend line, which was in play from 15th December. This at the time was a very promising recovery, as XMR/USD had gained as much as 55%. Unfortunately, however, the bulls were unable to break down supply heading into the $60 region and were eventually dealt a big hammer blow. On 10th January, the market bears forced a heavy breach to the downside, smashing through this support. The price had dropped a big double-digits, some 20%.

Stronger Malware Mining Monero (XMR)

There is a dangerous form of malware that can bypass being detected and mine Monero (XMR) on cloud-based servers. A recent notice was put out by Palo Alto Networks’ Unit 42, an intelligence team that specializes in cyber threats, regarding a Linux mining malware. This was detailed to have been developed by Rocke group, which has the ability uninstall cloud security products. It can do this to the likes of Alibaba Cloud and Tencent Cloud, to then illegally mine Monero on compromised machines.

The two researchers from Palo Alto Networks, Xingyu Jin and Claud Xiao, detailed the findings of their studies. Once the malware is downloaded, it takes administrative control to initially uninstall all cloud security products. Shortly after, it will then then transmit code that will mine the Monero (XMR). Further within their press release, they said, “To the best of our knowledge, this is the first malware family that developed the unique capability to target and remove cloud security products.”

Technical Review – XMR/USD

XMR/USD daily chart.

Given the current range block formation, eyes should be on the key near-term technical areas. Firstly, to the downside, $43, which is the lower part of the range. A breach here will likely see a retest of the December low, $38. To the upside, resistance be observed at around the mid $46 level. Should a breakout be observed here, then a potential retest of the broken trend line will be watched.

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 110 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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Litecoin Price Analysis: LTC/USD Bulls Enjoy Big Jump But Stubborn Resistance Capping Potential

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  • Litecoin sees a relief rally on Friday, but is still stuck within stubborn range-block.
  • LTC/USD price action has formed a bearish flag pattern structure, subject to a potential break lower.

The Litecoin price on Saturday was seen holding decent gains of over 5%, as life is kicked back into the bulls. The LTC/USD pair has been victim of trading within a stubborn daily $3 range. This very much being the case for the past nine trading sessions. It is a form of consolidation after the breach south from an ascending trend line. This had been supporting the price from 14th December 2018, up until the bears forced a breach on 10th January.

In light of the breakout below the above-mentioned trend line, a large wave of selling pressure came with that. LTC/USD plunged by as much as 25% to the lowest levels seen since the start of the month. The earlier described range-block formation has come as a result of the increased volatility that accompanied the break south. The high of the range should be noted at the $33 mark, with the lower support eyed down at the psychological $30 level.

Bear Flag

Given this type of price behavior from a technical standpoint, it appears to demonstrate some vulnerabilities to the downside. The calming and consolidating after an initial explosive drop lower to then potentially resume the selling pressure reflects this point. As can see from either the 4-hour or daily chart, price action has formed a bearish flag pattern. When the market fell from 9-10th January, this formed the pole of the bearish flag of the structure. The actual flag is currently being constructed, as part of the sideways trading being observed.

Lightening Network Trial Underway

As reported by the CCN team, Coingate, a cryptocurrency-based payments platform, has now executed a trial run of its Lightening Network via Litecoin.  The platform has partnered up with a privacy service provider, known as Surfshark for this pilot project. Within the partnership, the implementation of Lightening Network payment solution for Litecoin transactions is a big milestone for the cryptocurrency community.

Technical Review – LTC/USD

LTC/USD daily chart. A bearish flag structure can be seen.

As detailed earlier, a breakout from the range-block formation will be the next trend defining move. Should the bears manage to force a break below the lower support, tracking at $30, then a demand area below will be called into action. This can be observed tracking within the $28 price region, which is a known area to find buyers. A failure to do so could see LTC/USD drop back down towards $23-22 range.

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 110 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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