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SEC Rejects 9 Bitcoin ETF Proposals

UPDATE: The SEC has also disapproved two bitcoin ETFs from GraniteShares. The order can be found here.


The Securities and Exchange Commission (SEC) has issued rejections to bitcoin exchange-traded fund (ETFs) proposals from ProShares, Direxion and GraniteShares.

In three orders published on August 22, the rejections came ahead of previously reported deadlines arising from the SEC’s public-facing approval process.

Notably, the agency used the exact same reasoning – and wording – in all of its rejections.

The agency wrote in the case of ProShares:

“…the Commission is disapproving this proposed rule change because, as discussed below, the Exchange has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”

And in the case of Direxion’s five proposed ETFs:

“…the Commission is disapproving this proposed rule change because, as discussed below, the Exchange has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of the Exchange Act Section 6(b)(5), in particular the requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”

In all instances, the SEC stressed that it “emphasizes that its disapproval does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment.”

Similar language was also used in the GraniteShares rejection as well.

The rejections come mere weeks after SEC commissioners completed a review on a proposed bitcoin ETF from investors Cameron and Tyler Winklevoss, whose multi-year effort was dashed after a majority of the SEC’s commissioners backed up the agency’s original March 2017 decision.

One commissioner, Hester Peirce, dissented that decision, later telling CoinDesk in an interview that the move to block a bitcoin ETF is a disservice to both investors and innovators.

The SEC image via Shutterstock

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UK Crypto Futures Exchange Adds Bitcoin Cash Contract

Crypto Facilities, the U.K-based crypto futures exchange and CME Group partner, is adding a bitcoin cash product to its offerings.

The firm announced Friday that it was launching the contract on its platform, which is regulated by the U.K. Financial Conduct Authority. Trading of the bitcoin cash future will begin at 4 p.m. British Standard Time (BST).

The contract joins the company’s existing bitcoin, ethereum, XRP and litecoin futures contracts. Investors can take long or short positions on bitcoin cash, “allowing them to broaden investment opportunities and hedge risk more effectively,” according to the company.

Crypto Facilities CEO Timo Schlaefer told CoinDesk that “bitcoin cash is a top-five cryptocurrency by market cap so it was a logical next step to add BCH to our BTC, ETH, XRP and LTC futures offering.”

Schlaefer predicted that the offering would be popular with its customers, based on past interest in its other crypto futures, going on to say:

“We have seen volumes as high as $180 million in a 24-hour period and have average daily volumes ranging from $20–60 million notional per day. We expect BCH to be as successful as our BTC, XRP, ETH and LTC futures that all trade in significant volume.”

“Since 2015 we have seen a steady increase in volume in the cryptocurrency derivatives space, with the past year seeing the highest growth so far,” he added.

While Crypto Facilities does not have a U.S. branch, the firm partnered with CME Group to launch the latter firm’s bitcoin futures contract last December.

To that end, Crypto Facilities powers two bitcoin price indexes – the CME CF Bitcoin Reference Rate and CME CF Bitcoin Real Time Index – that underpin CME Group’s futures product.

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Ripple Endorses 'Preferred' Crypto Exchanges for XRP Payments

Distributed ledger startup Ripple has endorsed three cryptocurrency exchanges as its “preferred partners” for transacting with its xRapid payments service, which uses the cryptocurrency XRP.

Announced Thursday, Bittrex, Bitso and Coins.ph will now serve as Ripple’s “preferred digital asset exchanges” as part of its efforts to build out the XRP ecosystem.

Cory Johnson, Ripple’s chief markets strategist, told CoinDesk that the firm is essentially encouraging all of its clients in the U.S., Mexico and the Philippines to use those three exchanges, respectively, for sending funds using its xRapid service.

“So in the U.S. we’re saying the gold standard, our official partner is Bittrex. So any bank can go to Bittrex and have guaranteed liquidity on the spot, trade their dollars for XRP, zip over to Mexico to Bitso, our preferred partner there, and convert [to Mexican pesos],” he said in an interview.

The financial institutions would need to have accounts with the exchanges to convert U.S. dollars, or Mexican or Philippine pesos, according to Johnson.

The three exchanges were chosen due to their XRP holdings, allowing them to provide higher levels of liquidity, he said, adding that “there’s a whole bunch of companies around the world that are using XRP and what we’re doing is identifying three other [exchanges] that have a lot of XRP liquidity and steering more liquidity their way.”

While Ripple has only announced three exchanges so far, Johnson said more names are to follow.

He explained:

“The corridors we’re focused on [are] organic … we want to focus on busy corridors. We want to focus on places where there’s a very vibrant XRP marketplace, and we want to focus on places where we can have the most value.”

Ripple needs to determine where these places are, he said. As an example, he noted that Taiwan and the Philippines see large volumes of trading compared to other international corridors, meaning Ripple could focus more attention on that corridor.

Ripple image via Shutterstock

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Airbnb Co-Founder Backs $22 Million Funding for Crypto Dealer SFOX

A cryptocurrency dealer setting out to provide trading services for institutional investors has closed a Series A funding round of $22.7 million.

Called SFOX, the platform announced on Thursday that its new equity financing was led by Tribe Capital and Social Capital, and has backing from Airbnb co-founder Nathan Blecharczyk, Y Combinator, Danhua Venture Capital, Digital Currency Group and more.

Founded in 2014, SFOX operates as a trading hub for institutional investors, high-net-worth individuals and family offices. The firm helps these high volume traders fulfill their buy and sell orders by executing them through its integrations with different cryptocurrency exchanges.

SFOX aims to minimize the impact of high volume trading on the cryptocurrency market, while boosting trading liquidity – “one of the most significant barriers to institutional cryptocurrency adoption,” according to Arjun Sethi, co-founder and partner at Tribe Capital.

SFOX claims in the announcement that it has facilitated over $9 billion in transaction volume so far, and reports a 12-fold growth in client numbers already this year.

With the new funding, SFOX said it is working on rolling out crypto-asset management services, in addition to the existing trading facility. It also plans to increase manpower and expand to more geographic regions in the coming 12 months. 

SFOX’s chief executive Akbar Thobhani – who was previously head of growth and business development at Airbnb – said the plan is a response to increasing interest from clients in a greater level of exposure to cryptocurrency assets.

Thobhani commented:

 “We continue to observe sustained and increasing demand from institutions that want to include cryptocurrencies as part of a diverse portfolio but are reluctant to do so because of uncertainty and volatility.”

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Insurance Ratings Bureau Pilots IBM Blockchain for Automatic Reporting

The American Association of Insurance Services (AAIS) is turning to the IBM Blockchain platform to support a new automated insurance reporting tool, the organization announced Wednesday.

Built on IBM Blockchain using Hyperledger Fabric, the open Insurance Data Link (openIDL) system is aimed to simplify regulatory reporting by allowing insurance carriers to store data on a permissioned blockchain for regulators to view on an as-needed basis, a press release says.

The system would essentially streamline the association’s current mission to consolidate and report its members’ insurance carrier rating data to various state-level Departments of Insurance.

IBM industry academy member Craig Bedell told CoinDesk in an email that AAIS specifically chose IBM Blockchain due to both the open-source nature of Hyperledger Fabric and the enterprise-level platform that the computing giant provides.

At present, AAIS submits either monthly or quarterly reports for each member insurer, depending on state laws. However, the new system, which is currently in a pilot phase, would allow AAIS to deprecate its data reporting role, as carriers would directly store their own data on the blockchain. Regulators would then be able to examine the information at any time, rather than waiting for a report to arrive.

AAIS chief executive Ed Kelly said in the press release that the organization recognizes “the potential for blockchain to streamline the regulatory reporting process for our member carriers, as well as the opportunity to improve security, accessibility and accuracy of data for regulators.”

“Hyperledger Fabric’s support for private and confidential transactions allows insurers to share data with the network, knowing that they own their data and have control over who has access to it,” said IBM Global Insurance Industry global manager Sandip Patel.

“This is an exciting example of how blockchain can bring together an entire ecosystem of users and allow information to be shared in new ways to drive real business results,” he said.

Although in the pilot phase, Bedell said that the platform is already “open for business.” Insurance carriers are already being onboarded and the organizations are working to bring on state Departments of Insurance as well.

IBM image via Shutterstock

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Crypto-Powered Fantasy Football League to Raise $100 Million in ICO

A blockchain startup wants to raise nearly $100 million dollars to create a new form of fantasy football.

Called the Crown League, the project’s owner told CoinDesk on Tuesday that it seeks to form a professional fantasy football league, with 12 teams initially, which will collectively be owned by fans via the platform’s crypto tokens. In some respects, the league will act like other fantasy leagues, but it differs in being a single, unified entity operated by professional managers and owned by the general public.

Dan Nissanoff, chief executive of CrownThrown Inc. – the company behind the Crown League – told CoinDesk that fantasy football at present is “incredibly fragmented.” “Nobody cares about other teams,” he said. This is in part because “there’s nothing to cover in fantasy today.”

“All you can do is prognosticate who you can trade, who you can start, but you’re talking to millions of people who have their own teams,” he explained. The Crown League seeks to unite fantasy fans by giving them shared ownership of a single team on a blockchain, ensuring that “for the first time you can feel like an owner.”

These teams will be run and staffed by actual professional game managers and front office staff, with token holders able to influence decisions within each team. Token holders will also be able to vote to hire or replace team managers.

“We are going to give you access to, as a fantasy enthusiast, and there are tens of millions of them in the United States alone; we are going to give you access to the people playing at the highest level. You can follow the experts,” Nissanoff told CoinDesk.

He added:

“We’re going to bring the league to life with events at the national level [such as] the draft. We’re going to bring together groups that share the same financial and emotional interest … At the local level we’re going to have events branded by the teams.”

The firm has also announced a token pre-sale, which is expected to raise $30 million over 60–90 days. The sale, which will operate as a Simple Agreement for Future Tokens (SAFT) fundraiser, will be open to accredited investors through a regulation D offering.

The pre-sale will be followed by 12 “micro-ICOs” of $5 million apiece, with each representing a different team and open to the general public through a regulation A+ exemption, meaning it will need to be approved by the U.S. Securities and Exchange Commission. Nissanoff expects the public sales to occur somewhere between the end of 2018 and the first quarter of 2019.

The platform itself will launch on a test network around December and is expected to start full operation by next summer. As such, the first proper season should launch in the autumn of 2019 at the start of the National Football League season.

Football image via Shutterstock

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Jamaica Stock Exchange to Trade Crypto Assets in 2018

The Jamaica Stock Exchange (JSE) has announced that it will soon be offering cryptocurrencies as tradeable assets for its clients.

The company said Tuesday that it had signed a memorandum of understanding (MoU) with blockchain startup Blockstation for the creation of a new digital assets trading platform. While it is not clear which tokens will be initially listed, the platform is set to go live by the end of the year.

JSE managing director Marlene Street Forrest told CoinDesk that offering cryptocurrencies as investment products fits in with the equities, bonds and other investment products that the exchange already offers.

She said:

“So the end game at the end of the day is to trade tokens, the end game is smart contacts, the end game is to provide that area of the market that would like this product, to start to do so in a secure manner.”

Blockstation is providing the technology, she explained, while the JSE’s infrastructure will be networked to the new platform, allowing qualified investors to conduct purchases or trades.

Aside from listing cryptocurrencies for trade, Street Forrest said the stock exchange will continue to look at how blockchain technology can benefit the platform and its clients, going so far as to indicate that JSE’s plans may include issuing its own cryptocurrency at some time in the future.

“The environment changes, the entire ecosystem changes, so at that point in time that might be the case, [although] at this point in time that is not a discussion,” she said.

Blockstation co-founder and chief enterprise architect Jai Waterman told CoinDesk that the startup has been working with the JSE for roughly six months in order to develop a custom version of its platform for the exchange. Specific requests from the JSE have included tools to track market manipulation and other regulatory needs, he noted.

“Our mission is to provide … a secure method of trading cryptocurrencies with broker-dealers and stock exchanges,” he said. “We’re providing the stock exchange the technology for a broker-dealer network and repository, so that from end-to-end, their life cycle of trading – just like with securities – they can do the exact same thing with blockchain and cryptocurrencies.”

The JSE is in no rush, however, and is taking its time to ensure that the launch is safe for investors, Street Forrest said.

“We have a steering committee that was designed and formulated to look at the Blockstation product, to look at the blockchain technology in general and to go through the phases to ensure that we understand what we are getting involved with and are also trained in what this entire trading of cryptocurrency involves,” she explained.

As such, she said, the exchange’s integration of blockchain will be “gradual.”

Jamaica image via Shutterstock

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Former S&P President Leads Seed Round for ICO Compliance Startup

Regtech and compliance startup iComply has just completed a seed funding round led by former Standard and Poor’s president Deven Sharma.

The firm – which seeks to develop standard compliance tools and services for other blockchain startups and in particular those which launch initial coin offerings or ICOs – announced Monday that it raised a seven-figure number during the round, although it did not provide an exact figure. DMG Blockchain and Block X Capital also participated in the round.

In its announcement, iComply also revealed that former CFTC official Jeff Bandman, former Nasdaq and Financial Industry Regulatory Authority (FINRA) executive Manny Alicandro, MIT fellow Praveen Mandal and attorney Thomas Linder have joined the startup as advisers.

In conversation with CoinDesk, Sharma said he chose to invest in iComply specifically because of the startup’s “focus on compliance and risk services for ICOs.” Compliance, he said, will help ease regulator concerns by providing transparency into ICO issuers.

Sharma also believes that the firm can aid adoption by supporting traditional financial services firms looking into the technology.

“My interest is to see iComply evolve into a benchmark that investors can use to assess credibility of issuers, sustainability of underlying services and the price of ICOs,” he said.

The startup’s founder and chief executive, Matthew Unger, said in a statement that new ICOs and exchanges will have to answer to regulators including FINRA, the Financial Transactions and Reports Analysis Centre of Canada and the Swiss Financial Market Supervisory Authority, among others.

As such, he said, “iComply’s patent-pending software enables both security and utility tokens to monitor and document compliance, governance and risk procedures, before a public blockchain executes an immutable trade, providing trust, integrity and transparency for our clients.”

Sharma explained that new tools like blockchain still need transparency to build investor confidence. Doing so, he said, “will allow for more growth of innovative ways of raising funds and investment – I see iComply as a critical component of making the entire ICO space more successful, because it provides the confidence.”

The concepts of transparency and trust, he said, were what sparked his interest in blockchain to begin with.

That said, Sharma said he has yet to invest in any token sales, telling CoinDesk:

‘There have been a few ICOs that had a fundamentally robust offering that I understood and did interest me [but I] missed the opportunity. Others that have transparency from a service like iComply, I would [invest in].”

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Blockchain Social Network Minds Is Migrating to Ethereum

Blockchain-based social network Minds is migrating its platform to the ethereum network, the startup announced Monday.

After roughly four and a half months on its Rinkeby test network, the startup will be moving to ethereum for its full live launch. The firm claims to provide a censorship-resistant, accessible social network for users, especially those in potentially authoritarian nations, according to a press release.

The platform already sees around 500,000 daily page views, CEO Bill Ottman told CoinDesk. The platform also claims roughly 1.25 million registered users, about 75 percent of whom have already earned test tokens. These users will be eligible to receive the platform’s live token via a free “airdrop” distribution as a result.

“We expect an overall increase in transactions, both on-chain and off-chain, due to the activation of token withdrawals, purchases and rewards,” he said.

Ottman continued to say that the team had engineered a “hybrid on-chain/off-chain model” to ensure that the system can handle the volume Minds is seeing and to provide a simple user experience for crypto newcomers.

The on-chain and off-chain model will also help the platform handle large user volumes without congesting the ethereum network, according to the press release.

Users can pay tokens to ensure a greater number of people see their posts, or earn tokens by interacting with content. Users can also use it to pay creators directly and subscribe to premium content.

Ottman said the use case has been popular on the testnet, predicting that the decentralized platform will become one of the more popular apps on ethereum as a result of the launch.

The CEO anticipated few issues ahead, saying “the only disruption will be a 24-hour pause in [peer-to-peer] transfers between users via our Wire and Boost features … this is necessary only to ensure the airdrop to our beta users accurately reflects their prior token balance of earnings thus far.”

Elizabeth McCauley, blockchain business developer and Minds adviser, said in the press release:

“When governments crack down on free speech and team with centralized social media surveillance companies, [Minds] provides a refuge for individuals seeking an avenue for global interaction and idea exchange.”

Ether on a keyboard image via CoinDesk

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Blockchain Social Network Minds Is Migrating to Ethereum for Launch

Blockchain-based social network Minds is migrating its platform to the ethereum network, the startup announced Monday.

After roughly four-and-a-half months on its Rinkeby test network, the startup will be moving to ethereum for its full live launch. The firm claims to provide a censorship-resistant, accessible social network for users, especially those in potentially authoritarian nations, according to a press release.

The platform already sees around 500,000 daily page views, CEO Bill Ottman told CoinDesk. The platform also claims roughly 1.25 million registered users, about 75 percent of whom have already earned test tokens. These users will be eligible to receive the platform’s live token via a free “airdrop” distribution as a result.

“We expect an overall increase in transactions, both on-chain and off-chain, due to the activation of token withdrawals, purchases and rewards,” he said.

Ottman continued to say that the team had engineered a “hybrid on-chain, off-chain model” to ensure that the system can handle the volume Minds is seeing and to provide a simple user experience for crypto newcomers.

The on-chain and off-chain model will also help the platform handle large user volumes without congesting the ethereum network, according to the company.

Users can pay tokens to ensure a greater number of people see their posts, or earn tokens by interacting with content. Users can also use it to pay creators directly and subscribe to premium content.

Ottman said the use case has been popular on the testnet, predicting that the decentralized platform will become one of the more popular apps on ethereum as a result of the launch.

The CEO anticipated few issues ahead, saying “the only disruption will be a 24-hour pause in [peer-to-peer] transfers between users via our Wire and Boost features … this is necessary only to ensure the airdrop to our beta users accurately reflects their prior token balance of earnings thus far.”

Elizabeth McCauley, blockchain business developer and Minds adviser, said in the release:

“When governments crack down on free speech and team with centralized social media surveillance companies, [Minds] provides a refuge for individuals seeking an avenue for global interaction and idea exchange.”

Ether on a keyboard image via CoinDesk

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.