European Union Issues Two ICO Warnings

European Securities and Markets Authority (ESMA) issued two same-day warnings concerning initial coin offerings (ICO) on 13 November after the preceding weekend was witness to dramatic swings in prices and volatility. One release is geared toward investors and the other is aimed at participating firms. 

Also read: Israel Securities Authority Chairman Outlines Concerns Regarding ICOs

ESMA Warns ICO Investors

In what might be taken as a response to a rollercoaster weekend for cryptocurrency markets, where bitcoin cash traded places with ethereum, and bitcoin shed billions, ESMA has issued two same-day statements regarding ICOs.

Dated 13 November 2017, ESMA50-157-829 focuses its attention on investors. “If you are considering investing in ICOs or have already done so, be aware of the many risks this may entail,” ESMA begins, “including the total loss of your investment. In particular, be aware that you will have no protection,” they note.

ICOs are indeed largely unregulated in the traditional sense, having gained great traction this year as at least a tail in the price-comet that is bitcoin.

“ESMA has observed a rapid growth,” they write, “and is concerned that investors may not realise the high risks that they are taking.” “ICOs are highly speculative investments,” and “depending on how they are structured, may fall outside of the regulated space, in which case investors do not benefit from the protection,” they reiterate.

The regulatory arm is one of the three European Supervisory Authorities within the European System of Financial Supervisors bureaucracy.

They continue, “ICOs are also vulnerable to fraud or illicit activities, owing to their anonymity and their capacity to raise large amounts of money in a short
timeframe.” Risks include the above along with money laundering, losing one’s entire capital, lack of exit options and price volatility, inadequate access to information, and fundamental flaws in early, untested technologies, the body urges.

“Virtually anyone who has access to the Internet can participate in an ICO,” they point out.

ESMA Warns Participating ICO Firms

ESMA50-157-828 is decidedly more stern in its tone. Issued the same day, it urges firms “to meet relevant regulatory requirements.” In a cat-and-mouse, near Orwellian turn of phrase, they argue, “If their activities constitute a regulated activity, firms have to comply with the relevant legislation and any failure to comply with the applicable rules would constitute a breach.”

This might be very difficult for firms to ascertain, especially when the very same body refers to them as “unregulated.” Keen readers might ask, are such offerings regulated or not?

Some clarification might be had in the following: “where the coins or tokens qualify as
financial instruments it is likely that the firms involved in ICOs conduct regulated investment activities, such as placing, dealing in or advising on financial instruments or managing or marketing collective investment schemes,” the body details. These too seem rather broad and vague.

The memorandum then sets out some basic guidelines for firms. A prospectus is urged among start-ups in the field, containing “necessary information which is material to an investor for making an informed assessment of the facts and that the information shall be presented in an easily analysable and comprehensible form,” ESMA advises.

It continues in this manner, imploring firms to also be transparent in their organizational dealings and structure along with complying with anti-money laundering regulations. “Firms have an obligation to report any suspicious activity and to co-operate with any investigations by relevant public authorities,” they say.

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Singaporean Mining.sg Reports Increasing Hardware Demand

Mr. Dexter Ng of Singaporean company Mining.sg has reported growing demand for his company’s cryptocurrency mining hardware. Mr. Ng told Channel News Asia that “customers come in and order 50 rigs on their own.”

Also Read: Central Bank of Singapore Sees No Reason to Regulate Cryptocurrencies

It Has Been Reported That Singaporean Demand for Mining Hardware Is Increasing

Mr. Ng’s business began when he and his friends started making powerful computers specifically built for cryptocurrency mining. The 29-year old stated they then “posted photos online, on Facebook, and people started asking how much is this and they wanted [to] buy it… So I sold it to people who queried on Facebook, and after a while, we started selling many on Facebook, so we decided to incorporate this company.”

Mr. Ng reports experiencing a recent sudden spike in demand for his company’s cryptocurrency mining rigs. In recent months, the company reports having sold approximately 100 rigs per month – a significant increase from the 15 units that company sold in July of this year. Mr. Ng states that previously “probably one person only buys one or two. Now we get customers who buy 10, 20 or even 50.”

Mr. Ian Chan, a customer of Mining.sg, describes his initial trepidation when deciding to invest in cryptocurrency mining hardware. “Calculating the percentage of return is one thing but what if this machine every day gives me issue, where I need to debug or whatever. Then to me, am I buying something that I need to work on every day? From that angle, if I start with buying 20 units, then my problem multiplied 20 times. So I start with one, try it out and if it is good, then I slowly increase my investment in that.” Mr. Chan currently mines Zcash.

Mining.sg’s Mining Rigs Sell for From S$5000 ($3677 USD) to Over S6500 ($4780 USD)

Mr. Chan’s cryptocurrency mining rig generates an income of approximately S$300 ($220 USD). Without factoring the electricity costs incurred by running the rig, Mr. Chan predicts that he will break even on his investment in approximately two years. Ryu, Mr. Chan’s 13-year-old son, owns a mining rig as well.

Last month, the managing director of the Monetary Authority of Singapore (MAS), Ravi Menon, told media that the MAS does not intend to regulate cryptocurrencies in the near future, stating “as of now I see no basis for wanting to regulate cryptocurrencies.” Mr. Menon stated that the MAS intends to “look at the activities surrounding the cryptocurrency and asking ourselves what kinds of risks they pose, which risks would require a regulatory response, and then proceed from there,” adding that “very few jurisdictions regulate cryptocurrencies per se. Most have taken the approach that the currency itself does not pose the risk that warrants regulation.”

The following day, it was reported that numerous Singaporean financial institutions had closed the accounts of companies providing cryptocurrency payment services. The MAS addressed the account closures, stating that it does not interfere with the commercial decisions of banks, “including those in relation to the establishment and termination of business relationships.”

Do you think that mining demand will continue to grow despite the recent volatility in the price of bitcoin? Share your thoughts in the comments section below!

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Executives at Major Russian Bank: Russia’s Interest in Bitcoin is Overblown

Riccardo Orcel, the head of Russian bank VTB International, believes the Russian government’s interest in Bitcoin and cryptocurrencies are overestimated by the media.

Throughout October, Russia was said to have planned regulatory frameworks for cryptocurrencies, provide an efficient ecosystem for Bitcoin mining, and even launch its own cryptocurrency called CryptoRuble. Earlier this year, Russian President Vladimir Putin also met Vitalik Buterin, the co-founder of Ethereum, to discuss the potential of Ethereum network and smart contracts in major industries.

But, Orcel, the head of a leading bank and financial institution in Russia, stated in an interview with CNBC that the Russian government’s interest in the Bitcoin and cryptocurrency markets are overblown by media. He explained:

"There was some speculation that there was some buying coming from Russian investors, but more than these reports, as a bank, we have not seen much in terms of flows. There was some interest reported in the press but I've not seen in Russia a lot of interest in Bitcoin, to be honest. Clearly fintech (financial technology) is the future for the banking industry. For a country of the size of Russia, clearly having branches around the entire country is just not possible and fintech is the future.”

Orcel’s affirmation on the hype around the Russian Bitcoin and cryptocurrency markets is valid, as cryptocurrency trading has not even been legalized or regulated within the country as of yet. However, analysts are still optimistic Russia could evolve into the next cryptocurrency powerhouse, if it manages to regulate the Russian cryptocurrency sector with efficient and practical policies.

Andrey Kostin, president and CEO of VTB Bank, said that the interest and demand for Bitcoin and cryptocurrencies are increasing at a rapid rate. Kostin expressed his concerns over the lack of regulations in the Russian Bitcoin sector, given that the demand from general consumers and institutional investors in the region has been growing exponentially.

"We see a lot of high speculation factor in cryptocurrencies and I think it's dangerous. Until the governments decide how to regulate this area I think it will be very, very dangerous for investors to invest in cryptocurrencies,” said Kostin.

Particularly, analysts remain certain that the Russian cryptocurrency sector will evolve into a major market in the upcoming years because President Putin had emphasized in an official statement released by the Kremlin that the Russian central bank will follow the footsteps of other regions such as Japan to release necessary regulations for Bitcoin and cryptocurrency trading platforms.

On October 10, President Putin stated:

"As is known, many countries are looking for ways of regulating the circulation of cryptocurrencies and are beginning to create the necessary legislative framework, a legislative regulatory system. We need – based on international experience – to build a regulatory environment that will make it possible to codify relations in this sphere, reliably protect the interests of citizens, businesses and the state and provide legal guarantees for using innovative financial instruments.”

Source bitconnect

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Jeff Garzik Is Launching A Cross Chain ICO Called Metronome

Jeff Garzik has been something of a controversial figure in the Blockchain and Bitcoin space over the last twelve months. He was one of the first Bitcoin developers to take on an active paid role at a blockchain startup and he's since become an active proponent of the Segwit2X event and has become renowned for taking on any denouncers as part of heated Twitter arguments via his personal account.

Anyway, the latest news is that Garzik has decided that he's going to launch a fresh startup and he's going to do it by way of an initial coin offering (ICO).

The new venture is called Metronome and it's reportedly going to aim to allow cryptocurrency users and holders to jump between blockchains.

This is one of those things that has long been discussed as a potential answer to some of the shortfalls of the digital currency space but – until now – nobody has really taken action to get it into the real world. With Metronome, Garza is reportedly trying to do just that. The process will involve what he calls a 'proof of exit receipt', which serves as a sort of confirmation type item that a user has left one blockchain for another.

The announcement came at the Money 20.20 event that's currently ongoing in Las Vegas and that will wrap up today.

Here's what Matthew Roszak, co-founder of Bloq and chairman of industry advocate Chamber of Digital Commerce, had to say about the fresh development:

"Institutional investors should be very excited to see something like this, we’ve built a thousand-year cryptocurrency, something that’s built to last.”

And here's what Garzik himself said about the new venture:

"If I had a clean slate of paper this is what I would design.”

No doubt this event will cause some controversy in the space, not least because of its time (right ahead of the forking).

Let's see how things play out.

Source bitconnect

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GMO Will Hold an ICO to Fund Its Chip Development

Back in September, news hit the press that a Japanese company was developing what are essentially the next generation of Bitcoin mining equipment. The company in question, called GMO, outlined its intentions to create mining boards that are equipped with 7nm ASIC chips – dramatically improved over the current 16nm used today.

Fast forward a few weeks and we have just picked up on some fresh information related to the technology. Specifically, GMO as reported that it is going to use an initial coin offering (ICO) to underpin its sales efforts for its new Bitcoin mining operations.

While we don't know the terms of the sale and the structure it will accommodate, the company has said that it will be conscious of the protection of token purchasers and stakeholders’ profits when designing the token sale.

That's pretty vague, but chances are that it will involve offering customers the chance to purchase tokens ahead of production and then use these tokens to buy the mining equipment as and when it becomes available.

Here's the company's official line on the legal side of the development:

"We will consider properly the laws and regulations that are applicable to us under the current legislation including Payment Services Act and the Financial Instrument and Exchange Act.”

Beyond 7nm, GMO is also working on the development of mining equipment equipped with 5nm and 3.5nm chips. However, it's worth noting that, in reality, these sorts of cheap powers are a long way off and is probably going to take a few years before they are available for mass production.

According to the company, with the 7nm chips, it will be possible to reduce power consumption compared to the existing mining machines with the same performance, and achieve a computational performance of 10TH/s per chip.

That's a major shift and one that could change the face of Bitcoin mining as we know it long-term.

Source bitconnect

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Bitcoin Is a Commodity Not a Currency, Says South Korean Central Bank Chief

The head of South Korea's central bank has ruled out classifying bitcoin as a currency, arguing that cryptocurrencies are a form of commodity instead.

According to Seoul-Yonhap News, Bank of Korea governor Lee Ju-yeol rejected the idea when asked on Monday whether it's possible to accept cryptocurrencies as legal fiat. The declaration is  the latest official assessment on the tech following a ban on initial coin offerings.

"Regulation (for virtual currencies) is appropriate because it is regarded as a commodity, not at the level of legal currency," Lee said during an audit of the government by the National Assembly, the country's legislative body.

"It is not a situation for the Bank of Korea to take such an action at the present," he added.

That Lee would throw his weight behind legislative solutions to regulating the space is notable, given that work in this area has already advanced in some form.

Back in August, some lawmakers argued for tightened regulations to apply to cryptocurrency exchanges in South Korea in light of the spiking trading volume since earlier this year. Last month, the country's financial regulator also took a notable move in cracking down on activities around the ICO funding model.

During the legislative session, Lee also acknowledged that the central bank could do more on research around both cryptocurrencies as well as blockchain more generally.

"We also refer to a lot of virtual currency research conducted in countries like Sweden. The Bank of Korea will also put more emphasis on virtual currency research," he was quoted as saying.

Source Coindesk

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Hong Kong, Singapore to Collaborate on DLT Trade Finance Platform

Hong Kong's banking regulator and de facto central bank has announced a new collaboration with Singapore aimed to digitize trade finance using distributed ledger technology (DLT).

Making the announcement today at a fintech event, the CEO of the Hong Kong Monetary Authority (HKMA), Norman Chan Tak-lam, said the joint project with the Monetary Authority of Singapore (MAS) will focus on a DLT proof-of-concept called the Hong Kong Trade Finance Platform (HKTFP).

Already having seen involvement from seven Hong Kong-based banks, the project is designed to digitize trade documents and reduce risk and fraud in the industry. Ultimately, the authorities plan the creation of a cross-border infrastructure that would serve as a bridge between HKTFP and a similar trade platform in Singapore.

According to the South China Morning Post, Chan described the initiative as a "breakthrough' for distributed ledger technology, adding:

"We firmly believe that the time has come for trade finance to move into the digital era."

The CEO also announced a number of other schemes aimed to boost collaboration between Hong Kong and the Chinese city of Shenzhen, making it easier for fintech firms to operate in both jurisdictions.

The HKMA, along with Hong Kong's Law Society, Applied Science and Technology Research Institute and other entities, has also published a DLT white paper – research that addresses the potential of the tech while acknowledging that it "cannot be a universal solution" for all financial applications and innovations.

According to Chan, the research serves as an "essential building block" helping to drive innovations in finance, as well as contributing to the development of "smart banking" in Hong Kong.

Source Coindesk

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