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A Look at Europe’s Security Token Legislation

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Liechtenstein via TripSavvy

Europe continues to see more counties taking a pro-crypto stance. Countries such as the UK, Switzerland, and Malta, have already made huge strides towards furthering their respective positions in the market. While there are many contributing factors behind these moves, the introduction of security tokens has played a huge roll in these countries decision.

Security tokens allow for the digitization of traditional investments. This method is called tokenization. Tokenized assets are considered more stable than traditional cryptocurrencies by most countries. Currently, security tokens fall under the EU’s MiFIDII regulations.

MiFID II

The EU instituted MiFID II regulations on January 3, 2018. This legislative framework provides investors with added protections. Additionally, MiFID II regulations improve the functionality and efficiency of the market. The legislation is a follow up to the original MiFID (Markets in Financial Directive) regulations which have been in operation since November 2007.

Liechtenstein

The sixth smallest country in the world, Liechtenstein continues to develop their blockchain sector at an impressive rate. Despite being only 62 square miles in total, this tiny country ranks among the highest in terms of GDP per capita. In October 2018, the country released a public draft titled the “National Blockchain Act.”

The document highlighted the counties desire to further their blockchain aspirations. The move was quickly followed by an announcement by the country’s Union Bank AG. Here, the bank described their intention to be the first regulated bank issuing a security token. The bank looks to create a token for interbank activities such as transferring large amounts of funds internationally.

Germany

Germany does not consider cryptocurrencies as financial instruments. In September 2018, the country determined that Bitcoin traders don’t need any licensing and that trading cryptocurrency should remain legal. This was a major ruling in favor of crypto investors. This ruling meant that crypto investors did not need to adhere to Germany’s securities regulations.

Berlin via City Break

Berlin via City Break

In December 2018, Germany’s second largest stock exchange announced plans to launch a crypto token exchange. The Boerse Stuttgart Group partnered with the local Fintech firm SolarisBank to make the project a reality. The exchange’s release date is Q3 2019. According to developers, a variety of cryptocurrencies including utility, security, and exchange tokens will be hosted.

Switzerland

Switzerland has long been a financial epicenter in Europe. Swiss officials are keen on extending their financial influence into the blockchain sector. The country recently opened a blockchain business sector dubbed the Crypto Valley. Here, blockchain startups receive reduced taxes and other benefits provided by the Swiss government.

Aside from financial benefits, Swiss-based blockchain firms benefit greatly from the country’s clear cut blockchain regulations. The Swiss Financial Market Supervisory Authority (FINMA) breaks tokens into four distinct categories. These categories include asset, payment, utility, and hybrid tokens.

Estonia

Estonia was among the first EU members to legalize crypto activities. The country already approved over 900 crypto licenses since changing regulations last year. Those licensed include a variety of crypto businesses such as exchanges, startups,  and blockchain tech firms. Around 400 of the licenses issued belonged to crypto wallet providers according to recent reports.

Estonia managed to go from the poorest country in the EU to a thriving economy through a combination of factors. Tax incentives, a friendly business environment, and easy licensing procedures all contributed to the country’s rise in the blockchain sector. Today, Estonia is one of the most STO friendly countries in the world.

Malta

Malta continues to be a driving crypto force in the region. This country took the crypto reigns through a combination of factors. Malta was the first country in the world to provide a solid regulatory framework for crypto investors and ICOs. The government is pro-active in recruiting new startups to their market.

Today, Malta is one of the best locations in the world to launch your STO. The country already is home to numerous large crypto platforms. The worlds largest crypto exchange by volume, Binance, partnered with the Maltese Stock Exchange (MSX) in September of last year. The two plan to build a new security token exchange within the country in the coming months.

UK

The UK currently does not have crypto regulations in place. The country continues to research the cryptomarket with regulators claiming that it could be years before proper regulatory guidelines can be developed. In March 2018, the countries Crypto assets Taskforce issued a report in which cryptocurrencies were listed in three distinct classes. These classes include security tokens, utility tokens, and exchange tokens.

Currently, the UK crypto debate continues. The British Business Federation Authority (BBFA) released a report in which they detailed how bad regulations would hinder growth in the sector much more than “no regulations at all.” As it stands today, the UK has a strong blockchain community with analysts predicting future growth in this sector.

France

France took a much different approach regarding cryptocurrency firms. The Authorité des Marchés Financiers (AMF) released ICO guidelines last year. The new regulations require all ICOs to provide full transparency regarding their offerings. Companies must define their tokens use prior to approval. This demand is required so that officials can determine what type of token the company plans to issue.

France’s stance on ICOs is mimicked by a plethora of other countries around the globe. By making all ICOs operate in full disclosure, the country managed to simultaneously welcome STOs while reducing the number of ICOs in operation. STOs provide a much safer way for investors to participate in blockchain fundraising raising campaigns.

EU Security Tokens are On the Rise

Now that you have a better understanding of the cryptocurrency regulations currently under development in Europe, it’s easy to see why countries like Malta have invested so much into their blockchain sector.

As the global economy continues along the path of digitization, there is much to be gained for the country able to become the epicenter of this technological revolution. Hopefully, more countries around the globe will realize the importance of these developments and how they affect the future of global economics in major ways. For now, the race is on to see which European country is able to take the lead in the blockchain economy.

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David Hamilton is a full-time journalist and a long-time bitcoinist. He specializes in writing articles on the blockchain. His articles have been published in multiple bitcoin publications including Bitcoinlightning.com

Security Token News

VeVue Signs Partnerswith CBX for Token Launch

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VeVue Partners with CBX Exchange for STO

The blockchain-based social media platform, VeVue announced plans to host an STO in the coming weeks. The company intends to expand the platform’s capabilities with the funds raised. Now content creators have a more lucrative alternative to consider moving forward.

News of the company’s intentions first broke via an October 14 press release. In the post, the company announces its new strategy and partnership. As part of the firm’s new crowdfunding approach, VeVue partnered with the hugely popular CBX exchange.

CBX Exchange

For its part, CBX will be responsible for the sales, token issuance, and distribution of the VUE token. CBX is one of the largest crypto exchanges based in the Middle East. The firm operates a fully compliant EU exchange. Developers integrated both AML and KYC protocols directly into its trading platform.

VeVue via Homepage

VeVue via Homepage

CBX recently launched a campaign with Alibaba competitor GoJoyin in which the platform secured over $10 million in funding. The experience gained in this campaign will be critical for VeVue STO’s success.

VUE STO

The VeVue STO will commence on October 28, 2019, at 4 pm PST. Interestingly, the event is scheduled to only last 48 hours. CBX intends to issue 5 million VUE tokens to qualified non-US investors. Vevue also announced that there will only be 100 million VUE tokens in total available to investors. Of these tokens, 35 million are reserved for investor purchases.

Vevue and CBX Unique Strategy

CBX and Vevue have a unique strategy for their crowdfunding efforts. The company intends to host an STO monthly moving forward. Additionally, these auctions will be Dutch-style. Basically, the official token price is set after taking in all bids.

Highest-Price VeVue STO

This strategy enables the firm to receive the highest price for the total offering. For example, investors place their bids which include the price and quantity they desire. The firm will then accept the top 5 million bids for the tokens.

VUE Token Benefits

VUE token holders receive a portion of gross revenue collected via the VeVue social media app. Consequently, investors actively earn from VeVue’s ecosystem. The App provides content creators with a revenue-generating outlet. Here, users can create and monetize content such as videos easily.

VeVue Transaction Fees

Vevue charges a 5% transaction fee on the monetized content. This fee then enters into the dividend pool from which STO investors receive payments daily. Importantly, dividends are paid in VUE tokens. This unique strategy encourages users to create high-quality content to earn more tokens.

Next Level Social Media

Traditional social media doesn’t allow users the opportunity to earn from their content contributions.  In fact, the current social media giants provide content creators with zero payment for their efforts.

Social Media Heat

VeVue’s timing is impeccable as social media giants such as Facebook continue to confront lawmakers over a myriad of concerns. Facebook, in particular, appears to be in the target of regulators after announcing plans to issue its own native cryptocurrency called the Libra.

A Better Social Media Alternative

VeVue appears to have unlocked a better way to social media for everyone. Providing users with an opportunity to earn tokens for their content is a smart concept that has proved to be a great alternative in the past. You can expect to hear more from VeVue in the coming weeks as its STOs hit the market.

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CFTC Labels Ether a Commodity

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Ether is a Commodity

The crypto community got some exciting news this week after the Commodity Futures Trading Commission (CFTC) Chairman stated that Ether (ETH) is a commodity. The news follows similarly worded statements from SEC officials in the past.

The news came via an Oct 10 statement from acting CFTC Chairman Heath Tarbert. In the post, the Chairman announced that he believes Ether is not a security at this time. The news comes at a critical point in Ethereum’s development.

The news is a huge win for the Ethereum community. Currently, Ethereum is the second-largest cryptocurrency in the world by market cap ($20 billion). The ruling is important because it means Ether falls under CFTC regulations and not SEC securities regulations. Consequently, the decision allows financial institutions to offer a wide array of new products and open up entirely new markets moving forward.

Ether Futures and Derivatives

In the past analysts pointed out that the Ether derivatives market suffered due to the lack of transparency. Tarbert now says that you can expect to see both Ether futures and derivatives markets in the very near future. Surprisingly, he stated that these financial tools would hit the market in less than a year.

Ether Creator Vitalik Buterin via Medium

Ether Creator Vitalik Buterin via Medium

Transformative Token

According to the Chairman, Ether is a case of a transformative token. Basically, the token started as a security during the ICO event. At that time the enterprise was playing a controlling role over the digital asset. As time progressed, the Ethereum enterprise faded to the background as the cryptocurrency decentralized. Now the token serves as a utility.

Reverse Securities

Additionally, Tarbert described the reverse scenario in which a utility token slowly develops into a security. In this situation, you start off with a fully decentralized organization. Over time, the enterprise steps back in to take more control. Consequently, this creates a scenario where investors seek profits from the efforts of others. Now the token is a security.

Notably, SEC officials stated that they do not consider Ether a security in its current state. However, both the SEC and CFTC did point out that during the company’s ICO, Ether acted as a security. Luckily the SEC declined to fine the Ethereum development team for its ICO.

Bitcoin is a Commodity

Falling along this line of thought, Tarbert explained that Bitcoin is also a commodity. This statement coincides with the SEC’s decision to decline to label Bitcoin as a security. Analysts consider these actions as a precursor to this week’s news.

PoW to PoS

Also, Ethereum developers announced a shift from the Proof-of-Work (PoW) consensus algorithm to a more energy-efficient alternative, a Proof-of-Stake (PoS) consensus mechanism. PoS systems don’t require your PC to do heavy computations. Instead, users earn rewards for “staking” tokens in their wallets. In this manner, PoS tokens use far fewer resources.

Ether Moving Forward

The Ethereum community has much to celebrate moving forward. The cryptocurrency continues to see development across the entire sector. You can expect to see the Ethereum community expand as more ETH-based products enter the market in the coming months.

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SEC Seeks Input on ‘Boston Securities Token Exchange (BSTX)’ Proposal

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SEC Seeks Input on 'Boston Securities Token Exchange (BSTX)' Proposal

Launching Markets – BSTX

The Boston Securities and Token Exchange (BSTX) has recently filed a proposal for various rule changes with the SEC. These changes would allow for BSTX to launch what would be the market’s first digital exchange supporting full-fledged digital securities.

Joint Filing

The Boston Securities and Token Exchange is a by-product of a partnership between tZERO and BOX Digital. This pairing of companies launched the joint venture in mid-2018, with the intent to develop the first fully regulated digital exchange in the U.S.

BSTX is expected to utilize blockchain technology provided by tZERO, while BOX representatives work towards establishing regulatory clearance. With each providing different areas of expertise to BSTX, both tZERO and BOX have made it clear that this is a joint venture, with each having a 50% say.

Rule Change

The proposed rule change discussed here dates back to late June, 2019. At the time of the filing, it was viewed as having the potential to create a ‘rulebook’ for the operation of such exchanges in the United States. Only now, months later, is the SEC making the filing available for public commentary.

A few of the noteworthy attributes of their proposed exchange are as follows:

  • Asset ownership recorded using a private blockchain
  • Trading enabled through use of BSTX tokens
  • Whitelisted clients

At the initial time of its filing, we took a brief look at BSTX and their plans, including the use of an in-house token developed by the exchange.

Boston Security Token Exchange (BTSX) Seeks SEC Rule Change

Commentary

In their filing, made public by the SEC, the BSTX begins by outlining their plans and intentions for the proposed exchange.

“BSTX would operate a fully automated, price/time priority execution system for the trading of “security tokens,” which would be equity securities that meet BSTX listing standards and for which ancillary records of ownership would be able to be created and maintained using distributed ledger (or “blockchain”) technology.”

Boston Securities and Token Exchange (BSTX)

Operating within the United States, BSTX is a proposed digital securities exchange, which was founded in 2018. The company looks to become the first exchange of its kind, supporting full-fledged digital securities.

CEO, Lisa Fall, currently oversees company operations.

In Other News

Whether it be through the backing of others, or through their own endeavours, tZERO remains hard at work, establishing the digital securities sector.

We were recently fortunate enough to have interviewed tZERO CEO, Saum Noursaheli. In this exclusive interview we discuss past and future events pertaining to the company. Make sure to check out the following interview to learn more!

Interview Series – Saum Noursaheli, CEO of tZERO

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