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Will SEC’s Decision Not to Classify Ether as Security Fuel Demand for Decentralised Applications?

  by David Drake   Since the Ethereum blockchain network went live in 2015, it has significantly impacted the cryptocurrency industry. The network has been used by developers to create decentralized applications (DApps) and launch cryptocurrency based projects due to its smart contract feature. Additionally, ether, the utility token that runs on the Ethereum network, has been used to power decentralized applications developed on the network. For the past one year, the number of Initial Coin Offering (ICO) projects launched on the Ethereum network have increased significantly across sectors. Revolutionary projects in sports and finance sectors like SportsFix and URAllowance have joined the growing list. Despite this growth, ether, like other leading cryptocurrencies in the market, has faced uncertain times that have seen its prices fluctuate since the beginning of the year. When the Securities and Exchange Commission (SEC) chair said all tokens would be considered as securities and would ... Read More »

What Can the Crypto Market Expect following SEC’s Announcement that Ether is Not a Security?

  by David Drake     Ether, the digital currency based on the Ethereum blockchain technology, will not be considered as a security. This is according to William Hinman, the Securities and Exchange Commission, (SEC) Corporate Finance Division Director. Speaking during the Yahoo Finance All Markets Conference, Hinman made it clear that ether need not be regulated like stocks and bonds. This is because Ether, as well as Bitcoin, use decentralized networks and do not have defined structures like corporate stocks. Based on Hinman’s statement, it is clear that the SEC will stop considering cryptocurrencies that get fully decentralized as securities. The ICO Challenge The main challenge facing ICOs is a lack of a clearly defined regulatory framework. Also, there has been little transparency as to how the regulator applies the securities laws on digital assets with compound issues involved in outlining the probable use of various laws. However, the move ... Read More »

How SEC’s Clarity on Ether Could Boost Cryptocurrency Growth

  by David Drake     Ethereum network has played a significant role in the growth of the cryptocurrency market. As the network on which the digital currency, ether, runs, Ethereum provides a platform for developers to create decentralised applications. Earlier this year, there was uncertainty among crypto-developers when the Securities and Exchange Commission (SEC) through its Chairman, said tokens and digital assets would be considered as securities. Ether was originally offered as an initial coin offering (ICO) but has since been highly decentralised. The statement by SEC’s director of corporate finance, Mr. William Hinman has clarified that the digital currency is not a security. This means it would not be regulated the same way the SEC regulates corporate bonds and stocks. The main reason for not classifying ether as a security is the fact that it functions in a way similar to commodities such as gold, due to  its high ... Read More »

What SEC’s Latest View of Decentralized Currencies Means for the Crypto Industry

  by David Drake     Earlier this month, the Securities and Exchange Commission (SEC) announced that ether, a virtual currency, will not be regulated as a security. These news alone saw the price of ether rise by 9.4%, from $468 to $515. The price of bitcoin also rose by 4.8%, from $6,300 to $6,645 following a statement made by William Hinman, SEC’s Director for Corporation Finance. Speaking at a finance conference in California, Hinman went on record having said that based on ether’s current state, its decentralized nature, its present offers, the Ethereum network and its sale, its transactions do not constitute securities. According to Jori Falkstedt, CEO of GlobalSpy, the Ethereum platform has multiple uses and this recent statement by Hinman seems to acknowledge this fact. He says, “Ethereum has many uses from exchange instrument to crypto project’s operating environment and its enormous popularity, has already acquired a position ... Read More »

How to use Regulation A+ to raise up to $50 million capital

How to use Regulation A+ to raise up to $50 million capital

When the Securities and Exchange Commission (SEC) approved the changes to Regulation A, it has generated lots of debate and discussion. The new rules on Regulation A+  took effect last  June 19th. The rules are expected to create a new category of quasi-IPO. This will enable companies to raise money from the public at less expense compared to a regular IPO.There are however some important points to keep in mind. The old Regulation A had such low limits for fundraising as well as high compliance costs that it was rarely used. The limit was only $5 million, and companies had to file offerings in every state in which they were selling the securities. The new Regulation A+ creates two categories namely, $20 million for the existing Tier 1, and a new Tier 2 – raising up to $50 million, of which $15 million can be offered to existing shareholders. Tier 2 ... Read More »

Will New Guidelines Bolster Family Offices? Or Become Their Kryptonite?

Will New Guidelines Bolster Family Offices? Or Become Their Kryptonite?

By David Drake In the past few years, several changes have been made in the family office regulatory environment. Family offices that were not registered with the US Securities and Exchange Commission (SEC) in 2011 had to reassess their acquiescence with the latter’s regulations, which restricted family offices qualifying for exemption of the Registered Investment Advisors. The Final Rule 275.202 (a)(11)(G)-1, that came to effect on 22 June 2011, outlined the family offices excused from registration requirements contained in the Investment Advisers Act of 1940, and amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act -“Dodd-Frank Act” in July of 2010. As Registered Investment Advisers, family offices are subject to SEC’s oversight, and are expected to observe SEC’s regulations and reporting requirements with regard to annual disclosures, compliance programs, record keeping, solicitation agreements, plus marketing and advertising. “This is important because investors are looking for a well-grounded, long-term ... Read More »

SEC Catapults Obama’s JOBS Act and Enables SMEs and Startups to Raise $50 Million through Regulation A+

By David Drake   In a bombshell announcement, the SEC has just released the final form of Regulation A+ rules relating to Title IV of the JOBS Act, under which it has priority over state regulation for Regulation A offerings up to $50 million and stipulates co-ordinated reviews for offerings up to $20 million. Companies on a fast growth trajectory will soon have the ability to raise up to $50 million by directly approaching unaccredited investors much like an IPO, providing a potent alternative to sources of institutional financing such as venture capital. Many people were convinced that Title IV was the most potent game changer in the JOBS Act but had serious concerns about the expense and complications of State securities law which would require securities to be registered in every state in which they are sold. However, in their draft release of the proposed rules in December 2013, ... Read More »

What Last Month’s SEC Ruling Means for Investors

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Less than a month ago, the Securities and Exchange Commission lifted the advertising ban on private investments, which means that hedge funds can now promote their products to the general public. Let’s take a closer look at the SEC’s new ruling. The New Ruling According to the new SEC ruling statement that was issued on July 10, there is no longer any ban whatsoever on general solicitation and advertising on private placements. This means that, for hedge fund managers, a wealth of new opportunities has opened up – as well as new challenges. Marketing flexibility has now been expanded for managers of private hedge funds. Is It Good News? As of May of this year, broker-dealers are now required to file new reports with the SEC, ultimately meaning that there will be much more compliance with the Commission’s pre-established financial responsibility rules. These rules are designed to increase protections for ... Read More »

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