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South Korea to Decide on ICO Legality in November

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The South Korean government will make a decision in November on whether it will allow initial coin offerings (ICOs) again in the country, a top-level official has said. Hong Nam-ki, head of the office for government policy coordination, told lawmakers during the National Assembly’s annual audit on government actions that regulators in the country have been reviewing the topic in recent months, as CoinDesk Korea reported on Thursday.

Hong added that the Financial Services Commission (FSC), South Korea’s market watchdog, has been conducting surveys on ICOs since September. “We are going to form the position of the government in November based on the results of the investigation at the end of October,” he went on to say.

“If we waste time, the blockchain industry could face huge difficulties. We need to look at very realistic and specific ways to nurture the blockchain industry, and I think permitting ICO is one of them.”

Hong was responding to the question on ICO permission raised by Jeon Haecheol, a lawmaker from the ruling Democratic Party, who voiced support for lifting the current ICO ban.

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TokenMarket Launches UK’s First Tokenised Equity Crowdfunding Campaign

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Global investment platform, TokenMarket today announces plans to raise up to £10m via a Security Token Offering (STO). The offering, which is open to professional and self-certified investors, landmarks the first of its kind where the shares issued are represented as blockchain based digital tokens. The crowdfunding campaign is expected to take place within the Financial Conduct Authority’s (FCA) Regulatory Sandbox.

Over the last two years, TokenMarket has established itself as an industry veteran having assisted some of the most innovative blockchain companies in raising more than £240 million.

“There is a huge unmet demand for growth finance, particularly amongst tech startups. Europe has markedly failed to match the prowess of the US in nurturing technology champions that drive innovation, economic growth and job creation.

“At the same time, everyday investors are often shut off from exciting investment opportunities. We firmly believe that STOs will help to solve this dilemma by democratising access to finance whilst providing the same investor protections as traditional securities.

“As a platform we work with many exciting businesses, and we are delighted to launch our own STO, demonstrating our commitment to this revolutionary financing model,” Ransu Salovaara, TokenMarket CEO and Co-Founder, commented.

With £9m in revenue in its last financial year, the company has been completely self-funded up until this point. TokenMarket plans to use the additional funding to fully capitalise on the expected £77 billion a year market of startup and growth company financing.

Mikko Ohtamaa, TokenMarket CTO and Co-Founder, added: “Over the past 12 months, our team has been working on tokenised securities. We have designed and built an open-source platform that focuses on market transparency and security. We believe we have constructed a fully compliant yet non-custodial, blockchain-based platform that helps early-stage companies raise funding while potentially giving investors earlier liquidity.”

The TokenMarket platform, currently delivering fundraising and token issuance, is set to expand with the inclusion of its own security token exchanges in the EU and Dubai. This end-to-end approach aims to provide professional and self-certified investors with seamless access to primary and secondary markets.

The TokenMarket STO launches in two stages; a private placement for professional investors which is now open, and a tokenised equity crowdfunding campaign for self-certified investors which is expected to take place in March 2019.

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Iconiq Holding Announces the Listing of ICNQ Token for Trading on the GBX-DAX

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Global crypto asset management firm Iconiq Holding, a Sponsor Firm of GBX, announces the listing of the ICNQ token on the GBX-DAX. The Gibraltar Blockchain Exchange (GBX) is an institutional-grade, regulated and insured token sale platform and digital asset exchange. The Digital Asset Exchange (GBX-DAX) is a state-of-the-art exchange created with the high expectations of professional crypto-traders in mind. Adding to the diverse range of tokens on the GBX-DAX, ICNQ is the fifth token that has been listed on the exchange so far in 2019.

Nick Cowan, Managing Director and Founder of the GSX (Gibraltar Stock Exchange) Group Limited said, “I’m pleased to unveil the latest development in our ongoing efforts to provide the most dynamic trading experience possible, with the addition of the ICNQ token to the GBX-DAX. The Iconiq team have a wealth of experience in traditional financial markets and are acutely aware of the importance of accessibility and liquidity — two principles at the heart of our offering. Collaborations with like-minded organizations such as Sponsor Firm Iconiq, are fundamental to achieving greater recognition for our emerging industry.”

In January 2019, Iconiq Holding brought EOS to the GBX community by sponsoring its listing on the GBX-DAX. Available through Iconiq Holding, global crypto asset management firm and developer of the crypto asset management platform AMaaS, the ICNQ token powers the ICNQ ecosystem, creating a harmonic solution to digital asset management. Holders of the token gain exclusive membership to the ICO investment club and Iconiq Funds’ crypto index fund share classes. Additionally, the token is redeemable as a voucher by holders for discounts on ecosystem services.

Patrick Lowry, CEO of Iconiq Holding, the developer of the ICNQ token, said, “We are delighted to extend the reach of the ICNQ token, which is already delivering new standards of digital asset management. Bringing GBX-DAX users into our ecosystem is a natural next step for us, given our existing status as a GBX Sponsor Firm. The GBX’s secure and insured exchange allows for next level wealth generation, mirroring our own mission and efforts at Iconiq Holding.”

The ICNQ token will have trading pairs with USD, BTC and ETH to begin with, with additional pairs to be added in the near future.

The GBX-DAX is a digital asset exchange built on institutional-grade best practices and good governance, derived from the capital markets experience gained through the GBX’s parent company, the Gibraltar Stock Exchange (GSX), an EU-regulated stock exchange. With the goal of creating the most professional and secure trading environment possible, the GBX-DAX platform has been designed to be highly intuitive and easy to use while incorporating strict verification requirements to the listing of a wide range of assets.

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Crypto Funds Morph Into Venture Capitalists Shunned in ICO Boom

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Polychain Capital, which reached more than $1 billion in assets right before the 2018 market crash, just raised $175 million for a fund with a seven-year lockup period, Chief Executive Officer Olaf Carlson-Wee said. BlockTower Capital recently hired Eric Friedman to lead the firm’s venture strategy. Arca Funds is considering taking equity stakes in struggling crypto projects.

“There’s going to be a lot of opportunity in distressed buying and even activist investing,” said Jeff Dorman, partner and portfolio manager at Los Angeles-based Arca. “Often you can buy below even the cash value of the company.”

The line is being blurred in the wake of the collapse of the initial coin offering market, where startups were bypassing traditional venture funding by selling tokens directly to investors. But with a regulatory crackdown raising the risk of forced refunds, and with coin prices plunging as much as 90 percent last year, many investors want out — allowing the funds to come in and make purchases for cents on the dollar.

About 125 venture funds that usually provide capital in exchange for an ownership stake were launched last year, compared with 115 hedge funds that primarily act as investors, the first time the number has exceeded the total investment partnerships in the embryonic sector, according to Crypto Fund Research.

“Funds have silently transformed from hedge funds into venture funds as their liquid portfolios shrank in value, making a very high percentage of AUM illiquid,” said Kyle Samani, managing partner at Multicoin Capital Management in Austin, Texas. Multicoin has traditionally done venture deals in addition to investing in tokens, he said.

Many funds are focused on acquiring SAFTs, or Simple Agreements for Future Tokens, which entitle them to future coins from startups that plan to issue tokens once their product are ready, often at steep discounts of up to 80 percent.

“If you are able to have a discount, and de-risk it that way, then it’s very very helpful,” said Paul Veradittakit, a partner at Menlo Park, California-based Pantera Capital Management. He expects to see more companies raising capital this way, and that Pantera’s fund that invests in coins ahead of ICOs “is getting a lot more similar to venture.”

Crypto hedge funds posted losses of about 70 percent on average last year, according to Eurekahedge Crypto-Currency Hedge Fund Index. While 42 crypto funds closed in 2018, there are still another 740 or so worldwide, according to Crypto Fund Research, a consultancy run by a former Merrill Lynch analyst. The funds universe may shrink even further.

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Beitar Jerusalem Owner Sued by Chinese Investor for Alleged Cryptocurrency Fraud

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A Chinese cryptocurrency investor has filed a NIS 17 million lawsuit (about $4.6 million) against Moshe Hogeg and STX Technologies Limited (also known as Stox) alleging that the company’s owner Hogeg misappropriated millions of dollars worth of cryptocurrency invested in the company.

According to the lawsuit, filed on January 24 in Tel Aviv District Court, the investor, Zhewen Hu, invested a total of about $3.8 million worth of the virtual currency Ethereum in the Stox prediction market platform on the basis of the company’s promises and commitments in its white paper, which is a kind of prospectus that cryptocurrency companies make available to potential investors ahead of an initial coin offering (ICO).

According to the lawsuit, the Stox white paper claimed that if the firm were able to raise $30 million worth of Ethereum, it would invest all of the money to develop its prediction market platform and make it successful, thereby hopefully increasing the value of Stox tokens in secondary markets.

The August 2017 ICO of Stox raised $34 million. However, the lawsuit claims, Hogeg only invested $5 million of this total in the company and used the rest to invest in other ICOs, like that of Telegram. In addition, claims the lawsuit, Hogeg sold his own tokens in Stox before the earliest date when he said he would do so, thereby devaluing the tokens of other investors.

In November 2018, Hogeg was accused in a lawsuit of misappropriating funds in another cryptocurrency company under his control, invest.com. Hogeg has denied any wrongdoing in both cases.

Hogeg, one of Israel’s highest-profile cryptocurrency entrepreneurs, has in recent months gone on a multi-million dollar spending spree. On June 20, 2018, it was reported that he had purchased $19 million of land in the wealthy Tel Aviv suburb of Kfar Shmaryahu from businessman Ilan Ben-Dov, paying for part of it in Bitcoin.

In August, he bought Beitar Jerusalem, one of Israel’s top soccer teams, for $7.2 million.

In October, Tel Aviv University announced that it had accepted a $1.9 million donation from Hogeg to establish the “Hogeg Institute for Blockchain Applications” at the university’s Coller School of Management.

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RealBlocks Announces $3.1M Seed Funding

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RealBlocks, the technology platform powered by the blockchain that allows for seamless fundraising and investing in real estate, announces that it has closed a $3.1M seed round led by Science Inc. with participation from Morgan Creek Digital, Zelkova Ventures, Ulu Ventures, and Cross Culture Ventures.

The RealBlocks solution democratizes access to private equity by tokenizing shares of some of the best funds in the world. By using a proprietary blockchain-based subscription process, RealBlocks enables tremendous efficiency and access allowing investors worldwide to directly purchase micro-shares in funds using either fiat currency (i.e. USD) or cryptocurrency.

“With the support of our strategic investors, we’re accelerating development of our product and adoption of blockchain technology for real estate, an industry that previously hasn’t seen much innovation,” said Perrin Quarshie, Founder and CEO of RealBlocks. “This is a great opportunity to improve the investment experience for both sponsors and investors while also minimizing friction throughout the entirety of the process.”

RealBlocks provides three key benefits:

  1. Global Access: Through utilizing blockchain infrastructure for distribution,  RealBlocks allows for simpler and more efficient access for investors outside of the US, thereby accelerating capital formation for real estate sponsors.
  2. Institutional Real Estate: Investors on the RealBlocks platform will have access to offerings from some of the best private equity funds in the world.
  3. Instant Liquidity: Through the use of its bulletin board, RealBlocks provides investors with a mechanism for obtaining liquidity via peer-to-peer trading for an otherwise illiquid asset class.

RealBlocks investors receive an asset-backed token or share that represents ownership of an offering. Users have the ability to trade their ownership via a peer-to-peer bulletin board with investors across the globe. RealBlocks is helping to usher in the token economy, and real estate is just one of the many industries that will benefit from the tokenization of assets.

“2019 is going to be an incredibly important year for blockchain projects,” said Anthony Pompliano, Founder & Partner at Morgan Creek Digital. “After years of experimentation and development, the market expects these companies to solve real problems now. RealBlocks is one of the teams that has a working product and has shown they can execute at a high level — that is one of the reasons why we are excited to invest. One of our core theses at Morgan Creek Digital has been that every stock, bond, currency, and commodity will be tokenized at some point in the future. RealBlocks has developed a solution that is going to help the best players in the real estate industry join the blockchain revolution.”

RealBlocks is supported by Science Blockchain, who has supported and invested in companies leveraging blockchain technology to enhance and revolutionize how brands do business.

“We invested in RealBlocks because this use of blockchain technology has real-world benefits that perfectly align with our investment model,” said Greg Gilman, co-founder and Managing Director of Science Inc. “We believe that the real estate market, like nearly all asset classes, will be increasingly data-driven and digitized or digitally native, and we look forward to building on our history of transformative companies.”

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Zhiyuan Hui, the World’s Largest Volunteer Platform, Announces Blockchain Dapp Based on everiToken

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Hangzhou, China, January 12 — Zhiyuan Hui, the world’s largest volunteer service platform, signed a strategic cooperation agreement with everiToken. The Chinese non-profit will build a volunteer service application based on the everiToken blockchain.

As of December 2018, Zhiyuan Hui has over 71 million registered users and serves more than 430,000 non-profit organizations. Volunteers have worked over 100 million service hours through the platform, which is valued at over $500 million by the “China Volunteer Service Economic Value Measurement Report” issued by the United Nations.

One of the biggest challenges of operating such a large platform is verifying the authenticity of volunteer hours and service. In order to prevent fraud or data alteration, Zhiyuan Hui has partnered with everiToken to develop a blockchain-based volunteer tracking platform built on the everiToken public chain.

The new open public welfare ledger transparently records volunteer activity and service duration, issuing points called Yi Coin to nearly one million volunteers per day and guaranteeing authenticity through a decentralized blockchain ledger. All volunteer data is stored on-chain, which prevents tampering, and can be instantly verified through evtscan, ensuring transparency, reliability, and security.

Zhiyuan Hui’s new platform will be among the first to realize Edgar Cahn’s “time bank” concept, enabling volunteers to accurately record their hours and receive a Yi Coin reward for their volunteering contributions when they most need it. everiToken safe contracts, everiPass, and everiPay will help volunteers receive, store, and spend Yi Coin points.

Governments, enterprises, non-profit organizations, and other foundations can distribute Yi Coins to volunteers in return for their contributions, while volunteers can use Yi Coin to buy goods from select vending machines and convenience stores. Currently, volunteers can already use Yi Coin to buy basic goods, like food, electronics, and hygiene products, in nearly 100 unmanned retail locations with everiPass.

Further, the everiToken-based system provides audit trails for various stakeholders with access rights, including governments and funders, eliminating the possibility of fraud for the various poverty alleviation projects and government foundation subsidy programs managed by Zhiyuan Hui.

Token-customized public chain everiToken is a market leader in tokenization and token economy infrastructure. everiToken’s payment solution, everiPay, delivers best in class speed (up to 10,000 transactions per second), transaction confirmation times (as fast as 1 second), and fees as low as $0.00006 per transaction. The company’s newly developed “Safe Contract” greatly simplifies smart contract development by enabling users to call token-related APIs. everiToken raised over $10 million in an ongoing private funding round from several high-profile crypto funds, including Asian market leader Fenbushi Capital.

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ICOs Continue to Raise Money via SEC Back Door

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The number of initial coin offerings getting through the back door at the Securities and Exchange Commission skyrocketed last year, as the securities regulator sent mixed messages about the future of investment contracts based on digital assets.

MarketWatch counted 287 ICO-related fundraisings accepted by the SEC with a total stated value of $8.7 billion in 2018, peaking at 99 in the second quarter. That’s a significant increase from 44 fundraisings filed with a total stated value of $2.1 billion in 2017.

ICO promoters gained access to accredited investors through a back door called Form D, as first reported by MarketWatch in February of last year.

Form Ds are notices filed by a company for an offering that is exempt from full SEC registration requirements. The key criteria for the Form D exemption is that only “accredited investors,” that is, individuals that have a net worth of over $1 million, or that have consistently made over $200,000 per year in income, or companies that have over $5 million in assets, can invest. Companies don’t have to file the Form D before the offering takes place, but instead within 15 days after the first sale of securities in the offering.

MarketWatch searched the SEC’s Edgar database for mentions of words including “coin,” “ICO,” “token,” “initial coin offering” and “saft.” The SEC has been taking steps to warn investors and limit the number of scams from initial coin offerings. Chairman Jay Clayton repeatedly reassured markets in 2018 that no ICOs were “registered” by the SEC.

In May, the SEC’s Office of Investor Education and Advocacy’s tried to capture investors’ attention by setting up a mock ICO website using a bogus coin offering to educate investors about scam red flags. The SEC called it HoweyCoins.com, after the SEC v. Howey, the Supreme Court’s test for whether a transaction qualifies as an “investment contract” and is therefore regulated by the SEC.

In November, the SEC settled its first cases imposing civil penalties solely for ICO securities offering registration violations. The SEC had charged two companies that sold digital tokens in ICOs in 2017 — Airfox, a Boston-based startup that raised $15 million and Paragon, an online entity that raised approximately $12 million — without registering the tokens as securities or filing periodic reports with the SEC.

Later that month, the SEC brought their first cases over touting violations for initial coin offerings, charging boxer Floyd Mayweather Jr. and music producer DJ Khaled.

Based on MarketWatch’s analysis, the SEC’s actions may have helped to slightly staunch the demand for more offerings. But the public statements and speeches of SEC officials belied a reluctance to close the door completely on digital assets and the investment contracts based on crypto-concepts.

SEC commissioner Hester Peirce is a crypto booster, industry advocates say. They’ve nicknamed her “Crypto Mom” after remarks in dissent of a decision by the SEC to reject the application from Cameron and Tyler Winklevoss for a bitcoin-backed exchange-traded fund.

In a speech via video to the Crypto Valley Summit in Zug, Switzerland on Nov. 7 she acknowledged that U.S. regulators are “admittedly sending mixed messages” because they are “coming to terms with crypto in different ways” and not always coordinating with each other.

“For example, our sister regulator, the Commodity Futures Trading Commission, has allowed the development of crypto-derivatives markets, but the SEC so far has not approved any application to list an exchange-traded product based on cryptocurrencies or crypto-derivatives trade on U.S. exchanges,” she told the audience.

Peirce said, “regulators have an unfortunate habit of allowing their own conservatism and their legitimate fear that they will be blamed when investments go wrong to curtail investors’ options.” She favors a different approach, one that “allows investors—informed by good information about the relevant exchange-traded product and encouraged to exercise a healthy dose of skepticism—to choose whether or not to buy the product. I am working on convincing my colleagues.”

In April Coindesk.com reported that Clayton told a Princeton University audience he rejected the idea that all ICOs are fraudulent, even though in February, in he said that he believes “every ICO” he’s seen qualifies as a security. Clayton opened the talk by saying he believes that “distributed ledger technology has incredible promise for the financial industry.”

On Dec. 6, Clayton told an audience at Columbia University, “I believe that ICOs can be effective ways for entrepreneurs and others to raise capital,” Clayton said, while also warning that “the novel technological nature of an ICO does not change the fundamental point that, when a security is being offered, our securities laws must be followed.”

These ICOs could potentially become available to retail investors and consumers, who are supposed to be protected from scams by SEC, as a result of the growth of secondary markets for the crypto-tokens that were created by these ICOs.

Several cryptocurrency-related firms are pursuing alternative trading systems or ATS licenses with the objective of providing trading platforms for ICO tokens and other cryptocurrencies. The SEC regulates these trading platforms, which trade securities listed on national exchanges but are not registered as exchanges themselves.

Coinbase acquired three firms, one of which — Venovate Marketplace — is registered as an ATS. Overstock already had an ATS from a previous acquisition. One of its subsidiaries, tZero, is using it to build a security token exchange.

Spokespersons at the SEC and CFTC did not respond to requests for comment due to the government shutdown.

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Hong Kong regulators say IPOs by cryptocurrency businesses are premature, putting Bitmain’s US$3 billion fundraising plan in peril

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Hong Kong’s stock market regulator and operator have signalled their reluctance to give their green light to an initial public offering (IPO) by the world’s largest assembler of cryptocurrency mining equipment, while a regulatory framework is still being drafted to ring-fence the disruptive technology.

It is premature for any cryptocurrency trading platform – or business associated with the industry – to raise funds through an IPO in Hong Kong before the proper regulatory framework is in place, according to two sources familiar with the matter, speaking to the South China Morning Post on condition of anonymity.

The reluctance by the regulator and market operator, which provide policy advice to the Listing Committee of the Hong Kong stock exchange (HKEX), could be an insurmountable hurdle in the US$3 billion IPO application by Bitmain Technologies, the world’s largest maker of cryptocurrency mining computers.

Hong Kong’s listing rules provide for a closed-door hearing before the Listing Committee, which gives the final approval or rejection within six months of an application, after all questions are answered. If the applicant fails to hear from the Listing Committee after the six-month period, the listing lapses.

A spokeswoman at the HKEX said the market operator could not speak about individual cases. China International Capital Corporation (CICC), the sponsor of Bitmain’s IPO, declined to comment. Bitmain’s spokesman declined to comment.

A rejection for Bitman’s fundraising would be another blow to the nascent industry that now finds itself hemmed in by an increasing number of regulatory hurdles, as central banks and other financial regulators worldwide seek to exert control over the disruptive technological phenomenon.

Founded in 2013, Bitmain is the largest assembler of the data-hungry computers used for mining cryptocurrencies, and operator of mining collectives.

Its explosive growth from start-up to unicorn – a company exceeding US$1 billion in value – traced the 15-fold surge in bitcoin’s value in 2017, which created a demand boom for Bitmain’s Antminer computers.

The size of conventional servers, Antminers are filled with dozens or hundreds of high-powered computer chips known as ASICs that crunch the data needed to verify cryptocurrency transactions. Their cheapest configuration starts from US$200 in Hong Kong, going up to several thousand dollars.

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GSR Capital Engages tZERO to Develop Commodity Contract Token

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Overstock.com, Inc. and its subsidiary tZERO Group, Inc., the global leader in blockchain innovation for capital markets, announced that Hong Kong-based private equity firm GSR Capital has retained tZERO to develop a smart contract token that will be utilized for an upcoming sale of cobalt. Subject to compliance with applicable regulatory requirements, the sale is expected to offer recurring tranches of electric vehicle (EV) battery-grade cobalt, with up to $200 million of the material projected to be available for sale in 2019, with more planned for 2020.

tZERO and GSR Capital intend to build an ecosystem in Asia for tokenized commodity purchase contracts that would simplify the process of identifying, purchasing and tracking the supply of rare minerals. The companies also envision adding a security token trading platform in the region, subject to compliance with applicable regulatory requirements.

To accommodate an additional key partner in that project, the companies will be extending the deadline to finalize their previously-announced equity investment until Feb. 28, 2019. More information on the previously announced equity transaction can be found in a letter to investors in the Form 8-K filed by Overstock on December 17, 2018, which can be found on the company’s Investor Relations page.

“GSR Capital and our partners are pushing forward with our plans to create a first-of-its-kind cobalt offering in 2019,” said GSR Capital’s Chairman and Founder, Sonny Wu. “We are proud to partner with tZERO for this token offering and believe that their leadership in this space will benefit our shared global outreach. GSR and our partner will be doing more than just cobalt tokenization, and we see further growth in our partnership with tZERO including consummating an investment directly by next quarter.”

“We are excited to work with GSR and their partner on this innovative cobalt token offering,” said Overstock CEO and tZERO Executive Chairman, Patrick M. Byrne. “Smart contract automation of these transactions will significantly reduce overall costs while effectively improving transparency in rare earth metals purchases throughout the supply chain process. We look forward to bringing the future of commodities purchasing to the global marketplace.”

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Hong Kong to Tighten Cryptocurrency Rules

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Hong Kong is set to tighten regulations on cryptocurrencies, with plans to put exchanges, traders and other related companies under the oversight of the Securities and Futures Commission.

With less stringent rules on digital currencies than mainland China, where all crypto-related commercial activities are effectively banned, Hong Kong has become a thriving market for initial coin offerings. But growing concerns over fraud and money laundering have prompted the regulator into action.

According to the SFC’s guidelines, investment funds will be required to obtain a license if more than 10% of the assets they manage are made up of bitcoin or other cryptocurrencies, and will be allowed to sell related products only to professional investors.

Under the voluntary scheme, exchanges will be able to test virtual currency products or services temporarily in a “regulatory sandbox” before deciding on whether to seek a license.

The proposed regulations, which are to be implemented in stages, will also mean that companies can only issue ICOs for tokens that fulfilled SFC’s requirements. For instance, the tokens must have existed for at least 12 months.

In February, the SFC sent warning letters to seven local exchanges after receiving complaints from investors claiming they had been unable to withdraw fiat or cryptocurrencies from their accounts. Certain exchanges were accused of misappropriating assets or manipulating the market.

In March, the commission ordered Black Cell Technology to halt its ICO and charged the company with conducting unauthorized promotional activities.

Hong Kong’s actions reflect a growing trend. The Group of 20 leading economies is considering ways to regulate virtual currency assets as part of the global fight against money laundering.

As a financial center closely linked to mainland China, Hong Kong is taking steps in the right direction with measures like requiring identity verification for transactions, said Daisuke Yasaku of the Daiwa Institute of Research.

But the “cost of regulations will be high,” he warned.

Depending on the design of its platforms, an exchange can be required to report frequently to the authority and subject to rigorous inspections and monitoring, Yasaku pointed out.

“The requirements of the SFC initiative may prove too burdensome for some operators”, said Timothy Loh, who manages a law firm in the territory. Some will decide not to join the new framework in order to maintain their current shares in the market.

Some argue that higher trading costs also risk discouraging institutional investors from entering the market, dampening hopes that their presence will help stabilize it. The counter argument is that tighter regulations may lead to greater investor confidence over the long run.

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