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Malaysia’s Stock Exchange to Develop Blockchain PoC for Security Borrowing and Lending

Kuala Lumpur stock exchange Bursa Malaysia is working on a blockchain-enabled security borrowing and lending proof-of-concept.

Kuala Lumpur-based Bursa Malaysia, the country’s stock exchange, is working on a blockchain-enabled security borrowing and lending proof-of-concept (PoC). English-language local media Bernama reported on the developments on May 6.

Per the report, the initiative aims to develop greater transparency and address other challenges of borrowing and lending securities in Malaysia.

More precisely, the exchange’s CEO, Datuk Muhamad Umar Swift, reportedly said that the PoC should increase the efficiency, speed and capacity of the aforementioned services, which should consequently bring greater demand. Swift claims that the benefits of the PoC will not be limited to the customers of Bursa Malaysia:

“The collaboration also benefits the wider industry through new knowledge, insights and practical experience in harnessing digital innovation to support and drive the growth of the capital market.”

The news outlet claims that this is the first such initiative taking place in an Association of Southeast Asian Nations member state.

Lastly, the report specifies that the PoC has been developed in partnership with Hong Kong-based Forms Syntron Information, the stock exchange’s technology partner. The project will reportedly involve Affin Hwang Investment Bank Bhd, CIMB Investment Bank Bhd, Citibank Bhd, Retirement Fund Incorporated and Malacca Securities.

As Cointelegraph reported last week, the CEO of the London Stock Exchange, one of the world’s oldest stock exchanges, believes that blockchain could have a use in issuing securities and settlement.

In March, news broke that major Spanish stock market operator Bolsas y Mercados Españoles has completed its first blockchain pilot for electronic certificates of collateral pledges.

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ASX Probes Penny Stock Seeking to Raise $15 Million in an ICO

The Australian Securities Exchange (ASX) has launched a probe into an IT firm behind a listed penny stock seeking to raise $15 million via an initial coin offering (ICO) for the launch of a cryptocurrency exchange.

Called Byte Power Group (BPG), the public firm issued a statement on Wednesday with answers to a total of 17 questions raised by the ASX requiring the firm to provide details on its intended token sale, disclosed on July 19.

Based on a release at the time, BPG aims to issue a total of 1 billion Byte Power X Loyalty Tokens (BPX Tokens) and plans to sell 25 percent of the amount to private investors at a price of US$0.06 per unit.

The goal is to raise as much as $15 million for the firm to fund the launch of the exchange, where the BPX Tokens can be further traded and used to offset transaction fees. The remaining 75 percent will be allocated for “pre-registered users of the exchange, company special releases, pre-opening and future marketing drive,” according to the plan.

As BPG aims to become the first publicly traded company in Australia to launch a cryptocurrency exchange via the ICO funding model, the move sparked concerns from the ASX over whether it is “in compliance with the ASX Listing Rules.”

On Aug. 1, the ASX’s compliance team sent a letter to BPG, requiring the firm to justify the legality of the planned operation, listing the 17 questions that asked about the status of the ICO, whether it had obtained any legal advice and more.

In today’s written response, BPG said it had already started selling the tokens to private investors in Australia and Singapore with a plan to further roll out the scheme in Hong Kong. It has not responded to a CoinDesk enquiry on how much it has raised so far, or whether any of the 75 percent of the total tokens would be further sold to investors.

In both of the jurisdictions in which it has started selling tokens, BPG claimed it received legal advice that the tokens are not deemed as securities, claiming they are not regulated as a financial product under the Corporations Act of Australian law.

As previously reported by CoinDesk, the Australian Securities and Investments Commission (ASIC) issued regulatory guidance for ICOs in September 2017.

The financial watchdog said at the time ICOs that offer financial products should be regulated under the Corporations Act and gave further details on how it defined such financial products, stating:

“If the value of the digital coins acquired is affected by the pooling of funds from contributors or use of those funds under the arrangement, then the ICO is likely to fall within the requirements relating to MISs [managed investment schemes]. This is often the case if what is offered through the ICO has the attributes of an investment.”

As of press time, the ASIC has not responded to CoinDesk’s request for comment on the BPG case.

It now remains to be seen how the ASX will respond to the letter and whether it will take any action over the listed firm’s ICO activity.

Australian dollar image via Shutterstock

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Malta Stock Exchange Inks Deals to Build Security Token Exchanges

MSX, the newly launched fintech arm of the Malta Stock Exchange, has inked several new deals aimed at creating new marketplaces for tokenized securities.

The newly inked deal sees MSX team up with Neufund, a platform for securities tokenization and issuance, to build a “regulated and decentralized, global stock exchange for listing and trading tokenized securities alongside crypto-assets,” according to a press release.

Exactly what will make the new exchange decentralized was not explained, however.

The partners are already planning a pilot later this year, which will include a public offering of tokenized equity on Neufund’s primary market that will later be available for trading on Binance (by way of a separate agreement with Neufund) – pending a green light from regulators in Malta, that is.

Neufund claimed the new platform will be “the first end-to-end primary issuance platform for security tokens.”

Calling the project a “pioneer in digital finance,” Joseph Portelli, chairman of the Malta Stock Exchange, said:

“We are delighted to welcome Neufund as our key partner in building a blockchain-based exchange that is fully integrated with established financial markets.”

In related news, crypto exchange OKEx has also partnered with MSX to launch a new exchange – called OKMSX – for the trading of “institutional grade” security tokens.

The platform is expected to launch by Q1 of next year, according to a different press release.

Malta has recently been moving to draw crypto and blockchain firms, in June passing three bills pertaining to cryptocurrencies, blockchain and distributed ledger technology (DLT). The news marked Malta as one of the first jurisdictions in the world to pass specific legislation around the tech.

Malta Stock Exchange image via Shutterstock

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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Chinese Tech Firm Probed Over Launch of Crypto-Mining Video Console

Leshi Internet, a Chinese video streaming website with a history of financial troubles, is being questioned by the Shenzhen Stock Exchange over its subsidiary’s move into the crypto space.

Lerong Zhixin, a smart TV maker owned by Shenzhen-listed Leishi, announced a plan on Wednesday to partner with a blockchain startup to launch a video streaming console that can be used to mine cryptocurrency.

At a launch event this week, the subsidiary claimed that, since the new product integrates a distributed network, users will be rewarded with tokens by allowing their idle broadband to be shared with other users connected to the blockchain.

Following the announcement, the Shenzhen Stock Exchange – which is administrated by China’s Securities Regulatory Commission – sent Leshi a formal enquiry on Friday, demanding details about the firm’s blockchain resources and manpower, as well as its partner’s technical capacity.

The exchange also challenged the firm over potential regulatory issues regarding the process of cryptocurrency mining in China.

Where the questions are leading, effectively, is to ascertain if Leshi indeed has the technology to deliver the promised product or it is taking advantage of blockchain hype to boost its stock price.

Since the initial announcement, Leshi’s share price increased by as much as 5 percent over the last two days.

Although the gain may not be as notable as previous similar cases of firms seeing stock spikes after pivots to blockchain, the news comes at a time when Leshi is regaining its financial health after years of debt and financial troubles.

Launched in 2004 as a video streaming service, Leshi made a series of attempts to expand over the past few years in order to compete with international streaming giants like Netflix. It was later reported to be in financial deep water by media outlets in China and elsewhere, after which its share price declined from as high as $26 in 2015 to around $0.50 at the moment.

In September 2017, Leshi’s founder and its holding company LeEco were put on a a credit blacklist by regulators in China, public data shows. A local court in Beijing reportedly seized millions of dollars-worth of Leshi shares in December.

Video streaming image via Shutterstock

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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Shanghai Stock Exchange: New Regulation 'Crucial' to Clear Way for DLT

Shanghai Stock Exchange (SSE), one of the world’s largest securities trading venues by market capitalization, is eyeing the use of distributed ledger technology (DLT) in the securities market.

The SSE published a research paper on Tuesday, which analyzed the use of DLT in various stages of a security transaction, such as the pre-trading customer registration, securities issuance and trading, and post-trading settlement.

It went on to summarize some key benefits of adopting DLT in China’s financial infrastructure, such as increasing the settlement efficiency by replacing the current T+1 model, under which a transaction can only be settled one business day after an order is executed.

As the world’s fourth largest stock exchange with a market cap of $5.12 trillion as of December 2017, the SSE is a non-profit organization directly administrated by the China Securities Regulatory Commission.

With references to existing works focused on the topic carried out by its counterparts in other financial markets such as Hong Kong and Australia, the SSE identified two potential areas in the report where DLT may be beneficial in China, stating:

“A general worldwide consensus is that DLT will be a new revolution for the financial industry. The first application use cases will be over-the-counter securities issuance and trading, as well as order book post-trading settlement.”

That said, the research paper suggested that a potential deployment of DLT at the Chinese stock exchange could still face a series of regulatory hurdles, as it is in conflict with the current centralized registration and settlement system.

For instance, the SSE currently uses a third-party intermediary as custodian and for settling post-trading transactions, yet the use of DLT could fundamentally eliminate that system. To do that, the market needs new legal framework issued by regulators and central government agencies.

The paper’s author concluded:

“Regulation should adapt to the evolving technology. We suggest regulators treat the topic of DLT as a crucial study area moving forward … in order to develop a solid regulatory framework for embracing the financial innovation.”

Shanghai Stock Exchange image via Shutterstock

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.