The EY organization today announced it is using the Polygon protocol and framework to deploy EY blockchain solutions on the public Ethereum blockchain ecosystem.
As more enterprises adopt blockchain technology, transaction volumes and costs on the main public Ethereum blockchain have risen. Adopting Polygon’s commit chain solutions allows the EY organization to offer enterprise users increased transaction volumes with predictable costs and settlement times and the option to move transactions onto the public Ethereum mainnet.
EY has connected the Polygon public, permissionless commit chain into EY flagship blockchain services including EY OpsChain and EY Blockchain Analyzer. EY clients can connect their business operations into Polygon networks with just a simple configuration change on blockchain.ey.com. The main Polygon systems network and the main Polygon test and development network are now both directly accessible from blockchain.ey.com.
In addition to integrating the main Polygon commit chain into blockchain.ey.com, the EY organization is working with Polygon to create permissioned, private industry chains leveraging new models for handling transaction verification to increase efficiency and reduce transaction costs known as an optimistic rollup1. These industry chains would offer enterprises the comfort and security of a closed system but retain the close alignment with the public Ethereum mainnet that would make a future transition to public networks faster and lower risk.
Paul Brody, EY Global Blockchain Leader, says:
“Working with Polygon provides EY teams with a powerful set of tools to scale transactions for clients and offers a faster roadmap to integration on the public Ethereum mainnet. We discovered our shared priorities around open system and networks and the Ethereum ecosystem would make collaboration in this area much easier.”
Sandeep Nailwal, Co-founder, Polygon, says:
“The EY commitment to the public Ethereum ecosystem and to open standards was a big driver in evolving shared approaches. No other organization has made the same scale of commitment to the ecosystem and to open systems, or brings the depth of technology that the EY organization has in this space.”
Both the EY organization and Polygon are working on common roadmaps that will help prioritize enterprise-friendly features into the ecosystem with a particular focus on privacy technologies that enable sophisticated use cases and support regulatory compliance.
The Osprey Solana Fund is the first investment product in the US to invest exclusively in SOL.
Osprey Funds, LLC, a premier digital asset management firm, today announced the launch of the Osprey Solana Trust for private placement. The Trust is the first investment vehicle to offer exposure to SOL, the native token used on the Solana blockchain, the fastest blockchain in the world.
Following a breakthrough in mobile communications, Solana Founder and CEO Anatoly Yakovenko introduced Proof of History to blockchain, an algorithmic solution for timestamping transactions. This enables the Solana network to operate at incredible speed, processing 65,000 transactions per second with sub-second block finality, which will only get faster as network bandwidth increases.
“The pedigree of the science and potential of the technology behind Solana is unique among current blockchains,” said Greg King, CEO of Osprey Funds. “Solana has the potential to become the rails of an integrated, decentralized financial network that establishes one global price for assets. With the debut of the Osprey Solana Trust, we are continuing to build onramps for investors to access what we believe are the most promising blockchain technologies.”
The Osprey Solana Trust is currently available to accredited investors for subscription with a $10,000 minimum investment. The sponsor intends to pursue listing the fund on the OTCQX market as soon as possible and has also agreed to waive the management fee for all investors until January 2023.
Osprey Funds continues to deepen its disruptive digital asset investment platform with the Osprey Solana Trust being the fourth product launched this year. The firm also offers the Osprey Bitcoin Trust (OBTC), the Osprey Polkadot Trust and the Osprey Algorand Trust.
About Osprey Funds
Osprey Funds is the premier boutique digital asset investment firm. Based in New York, Osprey offers secure, transparent and cost-effective access to select digital assets via traditional investment vehicles. Learn more by visiting https://ospreyfunds.io/.
Designed as an open platform to encourage broad participation by banks globally
Platform will leverage blockchain technology and digitise M11 commercial bank money to reduce current frictions and latency for cross-border payments, trade transactions and foreign exchange settlements
Acknowledging that the future of global payments is on the cusp of a fundamental shift, DBS, J.P. Morgan (NYSE: JPM) and Temasek today announced plans to develop an open industry platform to reimagine and accelerate value movements for payments, trade and foreign exchange settlement in a new digital era, through a newly-established technology company.
The company, Partior2, aims to disrupt the traditional cross-border payments ‘hub and spoke’ model, that has resulted in common pain points, including multiple validations on payment details by banks, which translate to costly and onerous post transaction exception handling and reconciliation activities. Partior recognises the need for more efficient digital clearing and settlement solutions across the banking industry, and targets to address these challenges through the use of blockchain solutions to enable next generation, programmable value transfer for participating banks and their clients in real-time across a common and open platform.
The Partior platform has also set its sights on developing wholesale payments rails based on digitised commercial bank money to enable “atomic” or instantaneous settlement of payments for various types of financial transactions. Such functionality would help banks overcome challenges presented by the current standard sequential method of processing global payments.
Piyush Gupta, Chief Executive Officer, DBS Bank, said: “The current hub and spoke arrangement in global payments often results in delays as confirmations from various intermediaries are needed before a settlement is treated as final. This in turn has a knock-on effect and creates inefficiencies in the final settlement of other assets. By harnessing the benefits of blockchain and smart contracts technology, the Partior platform will address current points of friction. The open platform will enable banks around the world to provide real-time cross-border multi-currency payments, trade finance, foreign exchange and DVP securities settlements on a world-class platform, with programmability, immutability, traceability built into its suite of services.”
Takis Georgakopoulos, Global Head of Wholesale Payments, J.P. Morgan, said: “Our newly formed business unit, Onyx by J.P. Morgan, is focused on providing clients with the best-in-class platforms as their business models and banking needs evolve over time. We believe a shared ledger infrastructure such as the Partior platform will change the way payments are cleared and settled, through this first-of-its-kind, wholesale payments rail based on digitised commercial bank money. After five years of being a partner in Project Ubin, we are thrilled by the launch of Partior as it marks yet another milestone for J.P. Morgan and the industry – blockchain-based wholesale payments infrastructure where information and value can change hands around the world in a 24/7, frictionless way. J.P. Morgan is committed to being a leader in this space as our clients transition towards multiple bank platforms, de-centralised networks and programmable money.”
Chia Song Hwee, Deputy CEO, Temasek, said: “We are pleased to work alongside DBS and J.P. Morgan to create a global platform that will have tangible impact on global payments. Partnerships such as this are important in galvanising fundamental changes. Finding the right approach to payments transformation using new technologies should be a priority as we take our existing infrastructure into the next stage of digitalisation and connectivity.
“We’re also heartened by the interest from other banks and partners, and look forward to welcoming them on board as this new platform builds out,” Mr Chia added.
Sopnendu Mohanty, Chief FinTech Officer, Monetary Authority of Singapore, said: “The launch of Partior is a global watershed moment for digital currencies, marking a move from pilots and experimentations towards commercialisation and live adoption. With its genesis from Project Ubin, a public-private partnership on blockchain and CBDC experimentation, Partior is a pioneering step towards providing foundational global infrastructure for transacting with digital currencies in a trusted environment, spurring a wide range of use-cases in the blockchain ecosystem.”
The operation of Partior by DBS, J.P. Morgan and Temasek and the completion of development, launch and availability of services on the proposed platform are subject to obtaining any required regulatory consents and approvals.
When complete, the platform aims to provide 24/7 infrastructure that will enable financial institutions and developers to co-create applications that support use cases such as FX Payment Versus Payment (PVP), Delivery Versus Payment (DVP) and Peer-to-Peer escrows to complement and value-add to global financial ecosystems.
To encourage broad participation across the banking industry, Partior will be actively engaging leading banks to join the platform to establish the scale required to benefit the industry.
The platform will start with a focus on facilitating flows primarily between Singapore-based banks in both USD and SGD, with the intent to expand service offerings to other markets and in various currencies. Partior’s platform will also be designed to complement ongoing Central Bank Digital Currencies (CBDCs) initiatives and use cases.
These efforts by DBS, J.P. Morgan and Temasek build on their past work as part of Project Ubin3, an industry initiative by the Monetary Authority of Singapore to explore the application of blockchain technology involving multi-currency payments and settlements.
On 17 December 2020, the Banque de France successfully carried out an experiment on central bank digital currency (CBDC) with IZNES as part of the experimental programme launched in March 1.
The experiment consisted in the subscription and redemption by investors of money market fund units on a private Blockchain, provided by SETL, for a global amount exceeded 2 million euros. Cash settlements were simulated by central bank digital money issued on the blockchain. From a technological point of view, the experiment required the development and deployment of smart contracts so that the Banque de France could issue and control the circulation of CBDC tokens and ensure that their transfer takes place simultaneously with the delivery of the fund unit tokens into the investors’ portfolio. The experiment was carried out in collaboration with IZNES, SETL, CACEIS, CITIGROUP, GROUPAMA AM, OFI AM and DXC. This experiment represents a significant step forward in assessing the levers that a central bank digital currency provides for enhancing the efficiency and resilience of the settlement of financial asset in a blockchain environment, thereby contributing to the smooth functioning of the real economy. The programme’s other experiments are ongoing until mid-2021 and all the lessons learned will be an important part of the Banque de France’s contribution to the Eurosystem’s more global reflection on the benefits of CBDC.
The Reserve Bank today announced that it is partnering with Commonwealth Bank, National Australia Bank, Perpetual and ConsenSys Software, a blockchain technology company, on a collaborative project to explore the potential use and implications of a wholesale form of central bank digital currency (CBDC) using distributed ledger technology (DLT). This is part of ongoing research at the Reserve Bank on wholesale CBDC.
The project will involve the development of a proof-of-concept (POC) for the issuance of a tokenised form of CBDC that can be used by wholesale market participants for the funding, settlement and repayment of a tokenised syndicated loan on an Ethereum-based DLT platform. The POC will be used to explore the implications of ‘atomic’ delivery-versus-payment settlement on a DLT platform as well as other potential programmability and automation features of tokenised CBDC and financial assets.
Assistant Governor (Financial System) Michele Bullock said ‘With this project we are aiming to explore the implications of a CBDC for efficiency, risk management and innovation in wholesale financial market transactions. While the case for the use of a CBDC in these markets remains an open question, we are pleased to be collaborating with industry partners to explore if there is a future role for a wholesale CBDC in the Australian payments system.’
The project is expected to be completed around the end of 2020 and the parties intend to publish a report on the project and its main findings during the first half of 2021.
Technology in the last years aims, among others, to create a new and safe payments system for global
transactions that will be fast, secure, cheap, transparent, and decentralized. For
that, it’s going to use
value of most cryptocurrencies, like Litecoin and Bitcoin, fluctuates daily,
and while the digital currencies aim to facilitate safer transactions, their values
first wave of crypto assets has failed to provide a reliable and attractive medium
store of value. Crypto coins suffer from high volatility, limits to
scalability, complicated user interfaces and issues in accounting, governance
and regulation. Crypto assets have served more as a speculative asset class for
traders-speculators and those engaged in illegal activities rather than as a
means to facilitate global transactions and payments. Today, new
stablecoins have many of the features of more traditional cryptocurrencies but
aim to stabilise the price of the crypto coin by linking its value to that of
an underlying asset or a commodity.
are increasingly gaining traction as their values are pegged to other assets
such as the USD, gold, oil or silver. Stablecoins aim to mimic the
same functionality of
fiat currencies. A stablecoin is a crypto currency that is pegged to
and/or backed by
an underlying asset.
enjoy the benefits of a cryptocurrency (security, transparency, privacy, etc.)
without the extreme volatility that comes with most of them.
In the last months there has been a “stablecoin
invasion.” Numerous stablecoins have been released or are in development all
of the stablecoins are pegged at a 1:1 ratio with fiat currencies, such as the
USD or the Euro, which can be traded on forex. Other stablecoins can be backed
to other kinds of assets, such as commodities like gold, or even by other cryptocurrencies
Commodity-backed stablecoins are backed
by other kinds of assets, among others gold, silver or other precious metals. Gold is the
most common commodity to be collateralized.
Investors and users of precious metals-backed stablecoins essentially hold a tangible asset
that has real tangible value. Precious
metals have the potential to appreciate in value over time, which gives
increased incentive for investors to hold and use these stablecoins.
technology now has established itself
as a secure accounting method, and with BTC becoming well known to global
investors, a new era of gold-backed cryptocurrency is emerging, even countries
are looking to issue their own gold-based cryptocurrency.
coin is issued that represents a certain quantity of gold (e.g. 1
gram of gold equals 1 coin)so that at
a minimum the price of the stablecoin will always equal the current gold price.
The gold is stored in a safe location by a trusted custodian, and can be traded
exchanges with other cryptocurrencies.
example of stablecoins backed by precious metals are KAU (Gold Currency) and KAG (Silver Currency) which
are the primary currencies of Kinesis. On Kinesis
Gold Stablecoins you can find a presentation of Kinesis, a list of articles and other materials about this project, which is evolving into a whole monetary system.
evaluating gold-backed stablecoins look atthe legal framework concerning
ownership and storage of the gold: it is important to make sure that you own the physical
are also stablecoins backed by other cryptocurrencies. This allows the
stablecoins to be much more decentralized than their fiat-backed counterparts,
since everything is conducted on the blockchain.
there are also non-collateralized stablecoins that are not backed by anything,
which might seem contradictory given what stablecoins are. These types of coins
use an algorithm to control the stablecoin supply.
Although the cryptocurrency topic seems to have firmly entrenched in headlines all across the world, the process of working in this market (especially for professional traders from traditional markets) remains somewhat of an experiment and a niche challenge for a few brave ones. However, one team claimed that they have found a way of moving the market closer towards new rules of the game, while also making cryptocurrency trading more attractive for traders with a traditional stock market background. This team is FinSafe – a professional crypto-trading platform which combines best practices and tools from both the traditional and crypto markets.
According to Victor Murga, CEO of FinSafe, to date the crypto-market has successfully survived the time of 100Xs, hopes for quick profits and continuous growth. With full certainty, we can say that we have passed the phase of the Gold Rush and are entering that part of the story where having ordinary luck is no longer enough. If you are a pro trader, you need to work and work hard.
However, while the market itself has already undergone changes, working conditions change very slowly. An average trader is working as if they live in 2016-17: scattered crypto-exchanges, the lack of convenient tools, and the dependence on the movement of the largest whales. On the other hand, traditional markets with established rules and approaches strive and prosper because traders have all the necessary tools for comfortable work. These people have real capital, but entering crypto-markets is simply uncomfortable and inconvenient for them.
FinSafe is here to change the current situation.
Unique Trading Proposition
Due to several exclusive features, FinSafe proposes a solution radically different from other crypto projects. Firstly, no other solution on crypto market combines trading charts, indicators, cross exchange consolidated order book, smart order routing, market screener, real-time industry newsfeed, multi-screen (monitor) fully customizable layouts, fast order execution, and post-trading analytics. It’s our team’s main goal for the launch. According to the team’s statements, FinSafe is creating a truly unified tool that is equally convenient for both traders within crypto market and professionals from Wall Street. Traders will be working in an environment where the system provides relevant news, analytics, and key data, reducing the need to scour the internet for additional sources of information. Put simply, they will have just one piece of software that will replace everything they have ever used before.
Secondly, FinSafe will help crypto become more solid and credible currency in traditional traders’ eyes. How? Because of its stand-alone software. By connecting directly to the main exchanges like Binance, Bitfinex, Coinbase Pro, Huobi, HitBTC, Poloniex, Kraken, and Bitstamp, and integrating their APIs into FinSafe software, traders would be able to buy and sell their assets without the hassle of logging anywhere else but FinSafe platform. Besides, all operations can be visually monitored, helping traders to react if whales make a run on the market or other significant events that can affect trading profitability occur.
At the moment, FinSafe is focused on working in two areas. First is the development of a whole range of products, which are parts of the platform. For some of them, the company already has fully working MVPs. Others are in the conceptual phase.
The second direction is an SEC license. Once FinSafe has secured it, they will be ready for takeoff. Other licenses for the EU market can be acquired with less difficulty. Workaround will be created for the Asian region and the rest of the world as well.
Now available for trading on eToro, the IOTA coin is another interesting addition to the platform’s ever-growing selection of crypto. With multiple uses as an Internet of Things (IoT) platform and quite a bit of attention from the blockchain and cryptocurrency communities, IOTA presents an alluring trading and investing opportunity to some.
What is IOTA?
IOTA is a platform designed for enabling fast communication and transactions for IoT platforms. As more household items, cars and other products become connected devices, the need for a reliant protocol to mediate between them is on the rise. For example, in the near future, a smart fridge could “sense” that you are running low on orange juice and autonomously order more from your grocery store. This scenario requires a platform that could both relay the messages between the machines and take care of the financial aspect of the transaction.
And that is what IOTA is trying to do. Its Tangle technology enables multiple devices to communicate on a vast network that actually becomes stronger as it grows. Unlike traditional blockchain platforms, IOTA does not have miners, or specific nodes that verify transactions, but rather, each device that processes a new transaction is first required to verify a previous one and register it in a public ledger. The network’s overall processing power actually grows as more devices join it, while in most other blockchains, more network members could lead to latency and growing transaction processing times.
The creators of IOTA set out to make a network that has no transaction fees and is extremely scalable. Its unique architecture is designed to do just that, using the process described above. Moreover, since to buy a single IOTA token would cost fractions of a cent, it is quite easy to process even the smallest of payments (microtransactions) – another important feature for an IoT platform.
IOTA vs Bitcoin: Main differences
IOTA is quite different than other cryptos. To highlight these differences, here are a few key factors that separate it from the world’s first cryptocurrency, Bitcoin:
Scalability: Bitcoin relies on a blockchain network, which requires miners to process transactions. These miners compete amongst themselves to be the first to make the calculations necessary to approve the transaction and the winner earns a small fee in return. With its Tangle architecture, IOTA eliminated the need for miners by making each device responsible for processing its own transaction and the one requested by the device before it. This minimises transaction times and accelerates the network’s speed as it grows.
Microtransactions: Each Bitcoin is worth quite a bit, with its value reaching thousands of dollars. Therefore, it is counterproductive to use it for transactions which require a small amount of money, as the transaction fees could outweigh the price of the services or goods exchanged. In contrast, a single IOTA is valued at fractions of a cent, so it is easy to use it to make small transactions (such as the orange juice example used earlier). In fact, those wondering how to buy IOTA will find that the IOTA coin price is so insignificant, that exchanges trade it in units of millions (MIOTA).
Quantum computing resistance: While there are still no functional quantum computers in existence, the scientific community is mostly in agreement that they will eventually be introduced, with computing power that is massively greater than that of current computers. While, to this day, no blockchain network has ever been hacked, it is presumed that a quantum computer used by malicious entities could theoretically do so. However, IOTA founders claim that they designed their network in such a way that is much more resilient to such an attack.
What drives IOTA’s price?
Being both a cryptocurrency and an IoT platform, the IOTA chart is subject to various factors that can move it in any direction. For example, if the entire crypto market is on an upward trend, it could lift the IOTA price as well – and vice versa. In contrast, if the market is on a downtrend due to a negative perception of blockchain platforms, that could potentially be beneficial for IOTA, since it is not a blockchain platform per se.
On the IoT front, developments relating to the industry, its adoption by a popular sector, or events relating specifically to IOTA, such as a partnership with a high-profile company, could also influence its price. In addition, IOTA’s infrastructure is entirely original, not relying on any previous blockchain/cryptocurrency code. While this could be perceived as an advantage, there have been times when criticism of the platform impacted IOTA’s price.
Trading IOTA on eToro
Since being launched in 2015, the IOTA cryptocurrency has gathered a following and established itself as one of a handful of cryptos whose market caps are in the billions. Making its way into the top 10 ranking, IOTA is popular among many traders and investors. Now, IOTA is also part of eToro’s cryptocurrency selection, and traders and investors of the eToro community can add it to their portfolios.
By every measure there has never been a more exciting time to be alive than right now. In 2018 our world faces real challenges, but also immense opportunity. Our world is globalizing, and digitising. At the heart of this is emerging technologies like blockchain, and the promise it offers.
Within neuroscience, medical professionals aspire to make a very compelling contribution.
Though our world has indeed become more culturally and economically borderless than anytime before in history, when it comes to building ties those closest to us have long been overlooked. Governance remains impersonal and inefficient. It’s ‘analog’ existence undermining efforts of so many Americans ready to advance in good faith, and work in good will to find common ground.
These efforts are frustrated because voting is centralised. Flowing up to Washington, instead of flowing through America. That’s why Project Oblio: Mobile Populism is so inspiring. It doesn’t seek just electoral college reform, but total voting reform. To put power back in the hands of everyday Americans. To see voting via blockchain become a true one-person-one-vote system.
Equality that a democracy aspires to, equality as it should be – and equality as it finally will be.
Mobile Populism Giveaway
THE SECRET SATOSHI DOESN’T WANT YOU TO KNOW
We live in an era where the wealth gap is steadily increasing. Cryptocurrency represents humanity’s best chance of closing it. It is astounding to consider that a cryptocurrency with a fair and balanced distribution scheme has not yet been conceptualized, given the deleterious effects of the wealth gap on our lives.
Project Oblio: Mobile Populism has been under construction since 2015 and is best explained and understood by reference to the EOS cryptocurrency. The main difference between Oblio and EOS is that here, votes for block-producers are based on a potentially-anonymous and fluid biometric trust level.
EOS rate-limits transactions at the smart contract level, whereas Oblio limits them at the user-level. EOS votes based on wealth, Oblio requires a minimum biometric trust level for voters to take action. With Oblio, block producers can be voted in and out based on their personality, not on the quantity of tokens in their possession.
Cryptocurrency exchanges which rely primarily on automation with their wallets are the ones which pay the most in user fees. Nevertheless, these fees are unlikely to amount to exceed those of competing blockchains; automated transactions comprise ~99% of transactions anyway. With humans engaging in such a miniscule amount of transactions themselves, distinguishing between a person sending money to a friend, and a segment of artificial intelligent being put to work for a business, has become a challenge. Fortunately, we believe we can overcome that challenge.
The real secret Satoshi doesn’t want you to know? The slight catering towards CPUs (“one-CPU-one-vote”) is what causes blockchain fees, and prevents true adoption. The same goes for any consensus algorithm relying on token-based wealth.
You’ll soon use the OBL (the abbreviation designation for the ‘Oblio’ coin) that you collect here to send payments to your friends and family at no additional cost. In fact, with Oblio, any smart contract which you want to access is well within the realm of being a feeless transaction.
We’d like to remind you, Project Oblio is a research experiment!
We’re a small, but passionate team of neuroscientists from Columbia University, Duke University, University of Pittsburgh, Universidade Católica Portuguesa, and Rutgers University. We’re proud to share with you a product called ‘vybuds‘; a pair of affordable and high-quality bluetooth music headphones. We’re designing them to (almost-definitely) receive and process commands from facial movements, and potentially boost focus and memory. Our first prototype is sufficiently inexpensive for people to afford and will eventually generate wealth for Project Oblio in the form of biometric brainwave and/or muscle signals. Read more about our liveness-detection algorithm applicable for voice data, brainwave data, and selfie video data.
Unfortunately, the tech underlying vybuds is inadequate. As such, following the conclusion of our airdrop, we’ll be launching a proof-of-address crypto-kickstarter to facilitate the shipment of our prototype vybuds. We’re also planning to make a 3D-printable version of vybuds open-source; most importantly, we are presently in the process of developing a new, peer-reviewed, open-source, multi-channel EEG/tACS/music-headphone ASIC. This chip will be used to enhance the self-funding of proposals, methods, data, publications, and replications of decentralized neuroscience.
When science gets too entangled with money, bad things can happen. So, we’re collecting information about each of our users to make sure everyone gets only one allocation, and nobody can corrupt our results. We’re also taking almost none of the initial supply, compared to other blockchain projects.
William Hinman Director, Division of Corporation Finance
San Francisco, CA
June 14, 2018
Remarks at the Yahoo Finance All Markets Summit: Crypto
Thank you Andy. I am pleased to be here today. This event provides a great opportunity to address a topic that is the subject of considerable debate in the press and in the crypto-community – whether a digital asset offered as a security can, over time, become something other than a security.
To start, we should frame the question differently and focus not on the digital asset itself, but on the circumstances surrounding the digital asset and the manner in which it is sold. To that end, a better line of inquiry is: “Can a digital asset that was originally offered in a securities offering ever be later sold in a manner that does not constitute an offering of a security?” In cases where the digital asset represents a set of rights that gives the holder a financial interest in an enterprise, the answer is likely “no.” In these cases, calling the transaction an initial coin offering, or “ICO,” or a sale of a “token,” will not take it out of the purview of the U.S. securities laws.
But what about cases where there is no longer any central enterprise being invested in or where the digital asset is sold only to be used to purchase a good or service available through the network on which it was created? I believe in these cases the answer is a qualified “yes.” I would like to share my thinking with you today about the circumstances under which that could occur.
Before I turn to the securities law analysis, let me share what I believe may be most exciting about distributed ledger technology – that is, the potential to share information, transfer value, and record transactions in a decentralized digital environment. Potential applications include supply chain management, intellectual property rights licensing, stock ownership transfers and countless others. There is real value in creating applications that can be accessed and executed electronically with a public, immutable record and without the need for a trusted third party to verify transactions. Some people believe that this technology will transform e-commerce as we know it. There is excitement and a great deal of speculative interest around this new technology. Unfortunately, there also are cases of fraud. In many regards, it is still “early days.”
But I am not here to discuss the promise of technology – there are many in attendance and speaking here today that can do a much better job of that. I would like to focus on the application of the federal securities laws to digital asset transactions – that is how tokens and coins are being issued, distributed and sold. While perhaps a bit dryer than the promise of the blockchain, this topic is critical to the broader acceptance and use of these novel instruments.
I will begin by describing what I often see. Promoters, in order to raise money to develop networks on which digital assets will operate, often sell the tokens or coins rather than sell shares, issue notes or obtain bank financing. But, in many cases, the economic substance is the same as a conventional securities offering. Funds are raised with the expectation that the promoters will build their system and investors can earn a return on the instrument – usually by selling their tokens in the secondary market once the promoters create something of value with the proceeds and the value of the digital enterprise increases.
When we see that kind of economic transaction, it is easy to apply the Supreme Court’s “investment contract” test first announced in SEC v. Howey. That test requires an investment of money in a common enterprise with an expectation of profit derived from the efforts of others. And it is important to reflect on the facts of Howey. A hotel operator sold interests in a citrus grove to its guests and claimed it was selling real estate, not securities. While the transaction was recorded as a real estate sale, it also included a service contract to cultivate and harvest the oranges. The purchasers could have arranged to service the grove themselves but, in fact, most were passive, relying on the efforts of Howey-in-the-Hills Service, Inc. for a return. In articulating the test for an investment contract, the Supreme Court stressed: “Form [is] disregarded for substance and the emphasis [is] placed upon economic reality.” So the purported real estate purchase was found to be an investment contract – an investment in orange groves was in these circumstances an investment in a security.
Just as in the Howey case, tokens and coins are often touted as assets that have a use in their own right, coupled with a promise that the assets will be cultivated in a way that will cause them to grow in value, to be sold later at a profit. And, as in Howey – where interests in the groves were sold to hotel guests, not farmers – tokens and coins typically are sold to a wide audience rather than to persons who are likely to use them on the network.
In the ICOs I have seen, overwhelmingly, promoters tout their ability to create an innovative application of blockchain technology. Like in Howey, the investors are passive. Marketing efforts are rarely narrowly targeted to token users. And typically at the outset, the business model and very viability of the application is still uncertain. The purchaser usually has no choice but to rely on the efforts of the promoter to build the network and make the enterprise a success. At that stage, the purchase of a token looks a lot like a bet on the success of the enterprise and not the purchase of something used to exchange for goods or services on the network.
As an aside, you might ask, given that these token sales often look like securities offerings, why are the promoters choosing to package the investment as a coin or token offering? This is an especially good question if the network on which the token or coin will function is not yet operational. I think there can be a number of reasons. For a while, some believed such labeling might, by itself, remove the transaction from the securities laws. I think people now realize labeling an investment opportunity as a coin or token does not achieve that result. Second, this labeling might have been used to bring some marketing “sizzle” to the enterprise. That might still work to some extent, but the track record of ICOs is still being sorted out and some of that sizzle may now be more of a potential warning flare for investors.
Some may be attracted to a blockchain-mediated crowdfunding process. Digital assets can represent an efficient way to reach a global audience where initial purchasers have a stake in the success of the network and become part of a network where their participation adds value beyond their investment contributions. The digital assets are then exchanged – for some, to help find the market price for the new application; for others, to speculate on the venture. As I will discuss, whether a transaction in a coin or token on the secondary market amounts to an offer or sale of a security requires a careful and fact-sensitive legal analysis.
I believe some industry participants are beginning to realize that, in some circumstances, it might be easier to start a blockchain-based enterprise in a more conventional way. In other words, conduct the initial funding through a registered or exempt equity or debt offering and, once the network is up and running, distribute or offer blockchain-based tokens or coins to participants who need the functionality the network and the digital assets offer. This allows the tokens or coins to be structured and offered in a way where it is evident that purchasers are not making an investment in the development of the enterprise.
Returning to the ICOs I am seeing, strictly speaking, the token – or coin or whatever the digital information packet is called – all by itself is not a security, just as the orange groves in Howey were not. Central to determining whether a security is being sold is how it is being sold and the reasonable expectations of purchasers. When someone buys a housing unit to live in, it is probably not a security. But under certain circumstances, the same asset can be offered and sold in a way that causes investors to have a reasonable expectation of profits based on the efforts of others. For example, if the housing unit is offered with a management contract or other services, it can be a security. Similarly, when a CD, exempt from being treated as a security under Section 3 of the Securities Act, is sold as a part of a program organized by a broker who offers retail investors promises of liquidity and the potential to profit from changes in interest rates, the Gary Plastic case teaches us that the instrument can be part of an investment contract that is a security.
The same reasoning applies to digital assets. The digital asset itself is simply code. But the way it is sold – as part of an investment; to non-users; by promoters to develop the enterprise – can be, and, in that context, most often is, a security – because it evidences an investment contract. And regulating these transactions as securities transactions makes sense. The impetus of the Securities Act is to remove the information asymmetry between promoters and investors. In a public distribution, the Securities Act prescribes the information investors need to make an informed investment decision, and the promoter is liable for material misstatements in the offering materials. These are important safeguards, and they are appropriate for most ICOs. The disclosures required under the federal securities laws nicely complement the Howey investment contract element about the efforts of others. As an investor, the success of the enterprise – and the ability to realize a profit on the investment – turns on the efforts of the third party. So learning material information about the third party – its background, financing, plans, financial stake and so forth – is a prerequisite to making an informed investment decision. Without a regulatory framework that promotes disclosure of what the third party alone knows of these topics and the risks associated with the venture, investors will be uninformed and are at risk.
But this also points the way to when a digital asset transaction may no longer represent a security offering. If the network on which the token or coin is to function is sufficiently decentralized – where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts – the assets may not represent an investment contract. Moreover, when the efforts of the third party are no longer a key factor for determining the enterprise’s success, material information asymmetries recede. As a network becomes truly decentralized, the ability to identify an issuer or promoter to make the requisite disclosures becomes difficult, and less meaningful.
And so, when I look at Bitcoin today, I do not see a central third party whose efforts are a key determining factor in the enterprise. The network on which Bitcoin functions is operational and appears to have been decentralized for some time, perhaps from inception. Applying the disclosure regime of the federal securities laws to the offer and resale of Bitcoin would seem to add little value. And putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions. And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value. Over time, there may be other sufficiently decentralized networks and systems where regulating the tokens or coins that function on them as securities may not be required. And of course there will continue to be systems that rely on central actors whose efforts are a key to the success of the enterprise. In those cases, application of the securities laws protects the investors who purchase the tokens or coins.
I would like to emphasize that the analysis of whether something is a security is not static and does not strictly inhere to the instrument. Even digital assets with utility that function solely as a means of exchange in a decentralized network could be packaged and sold as an investment strategy that can be a security. If a promoter were to place Bitcoin in a fund or trust and sell interests, it would create a new security. Similarly, investment contracts can be made out of virtually any asset (including virtual assets), provided the investor is reasonably expecting profits from the promoter’s efforts.
Let me emphasize an earlier point: simply labeling a digital asset a “utility token” does not turn the asset into something that is not a security. I recognize that the Supreme Court has acknowledged that if someone is purchasing an asset for consumption only, it is likely not a security. But, the economic substance of the transaction always determines the legal analysis, not the labels. The oranges in Howey had utility. Or in my favorite example, the Commission warned in the late 1960s about investment contracts sold in the form of whisky warehouse receipts.Promoters sold the receipts to U.S. investors to finance the aging and blending processes of Scotch whisky. The whisky was real – and, for some, had exquisite utility. But Howey was not selling oranges and the warehouse receipts promoters were not selling whisky for consumption. They were selling investments, and the purchasers were expecting a return from the promoters’ efforts.
Promoters and other market participants need to understand whether transactions in a particular digital asset involve the sale of a security. We are happy to help promoters and their counsel work through these issues. We stand prepared to provide more formal interpretive or no-action guidance about the proper characterization of a digital asset in a proposed use. In addition, we recognize that there are numerous implications under the federal securities laws of a particular asset being considered a security. For example, our Divisions of Trading and Markets and Investment Management are focused on such issues as broker-dealer, exchange and fund registration, as well as matters of market manipulation, custody and valuation. We understand that market participants are working to make their services compliant with the existing regulatory framework, and we are happy to continue our engagement in this process.
What are some of the factors to consider in assessing whether a digital asset is offered as an investment contract and is thus a security? Primarily, consider whether a third party – be it a person, entity or coordinated group of actors – drives the expectation of a return. That question will always depend on the particular facts and circumstances, and this list is illustrative, not exhaustive:
Is there a person or group that has sponsored or promoted the creation and sale of the digital asset, the efforts of whom play a significant role in the development and maintenance of the asset and its potential increase in value?
Has this person or group retained a stake or other interest in the digital asset such that it would be motivated to expend efforts to cause an increase in value in the digital asset? Would purchasers reasonably believe such efforts will be undertaken and may result in a return on their investment in the digital asset?
Has the promoter raised an amount of funds in excess of what may be needed to establish a functional network, and, if so, has it indicated how those funds may be used to support the value of the tokens or to increase the value of the enterprise? Does the promoter continue to expend funds from proceeds or operations to enhance the functionality and/or value of the system within which the tokens operate?
Are purchasers “investing,” that is seeking a return? In that regard, is the instrument marketed and sold to the general public instead of to potential users of the network for a price that reasonably correlates with the market value of the good or service in the network?
Does application of the Securities Act protections make sense? Is there a person or entity others are relying on that plays a key role in the profit-making of the enterprise such that disclosure of their activities and plans would be important to investors? Do informational asymmetries exist between the promoters and potential purchasers/investors in the digital asset?
Do persons or entities other than the promoter exercise governance rights or meaningful influence?
While these factors are important in analyzing the role of any third party, there are contractual or technical ways to structure digital assets so they function more like a consumer item and less like a security. Again, we would look to the economic substance of the transaction, but promoters and their counsels should consider these, and other, possible features. This list is not intended to be exhaustive and by no means do I believe each and every one of these factors needs to be present to establish a case that a token is not being offered as a security. This list is meant to prompt thinking by promoters and their counsel, and start the dialogue with the staff – it is not meant to be a list of all necessary factors in a legal analysis.
Is token creation commensurate with meeting the needs of users or, rather, with feeding speculation?
Are independent actors setting the price or is the promoter supporting the secondary market for the asset or otherwise influencing trading?
Is it clear that the primary motivation for purchasing the digital asset is for personal use or consumption, as compared to investment? Have purchasers made representations as to their consumptive, as opposed to their investment, intent? Are the tokens available in increments that correlate with a consumptive versus investment intent?
Are the tokens distributed in ways to meet users’ needs? For example, can the tokens be held or transferred only in amounts that correspond to a purchaser’s expected use? Are there built-in incentives that compel using the tokens promptly on the network, such as having the tokens degrade in value over time, or can the tokens be held for extended periods for investment?
Is the asset marketed and distributed to potential users or the general public?
Are the assets dispersed across a diverse user base or concentrated in the hands of a few that can exert influence over the application?
Is the application fully functioning or in early stages of development?
These are exciting legal times and I am pleased to be part of a process that can help promoters of this new technology and their counsel navigate and comply with the federal securities laws.
 The Securities and Exchange Commission disclaims responsibility for any private publication or statement of any SEC employee or Commissioner. This speech expresses the author’s views and does not necessarily reflect those of the Commission, the Commissioners or other members of the staff.
 Section 2(a)(1) of the Securities Act of 1933 (Securities Act) [15 U.S.C. § 77b(a)(1)] and Section 3(a)(10) of the Securities Exchange Act of 1934 (Exchange Act) [15 U.S.C. § 78c(a)(10)] define “security.” These definitions contain “slightly different formulations” of the term “security,” but the U.S. Supreme Court has “treated [them] as essentially identical in meaning.” SEC v. Edwards, 540 U.S. 389, 393 (2004).
 I am using the term “promoters” in a broad, generic sense. The important factor in the legal analysis is that there is a person or coordinated group (including “any unincorporated organization” see 5 U.S.C. § 77n(a)(4)) that is working actively to develop or guide the development of the infrastructure of the network. This person or group could be founders, sponsors, developers or “promoters” in the traditional sense. The presence of promoters in this context is important to distinguish from the circumstance where multiple, independent actors work on the network but no individual actor’s or coordinated group of actors’ efforts are essential efforts that affect the failure or success of the enterprise.
SEC v. W.J. Howey Co., 328 U.S. 293 (1946). Depending on the features of any given instrument and the surrounding facts, it may also need to be evaluated as a possible security under the general definition of security – see footnote 2 – and the case law interpreting it.
 Secondary trading in digital assets by regulated entities may otherwise implicate the federal securities laws, as well as the Commodity Exchange Act. In addition, as SEC Chairman Jay Clayton has stated, regulated financial entities that allow for payment in cryptocurrencies, allow customers to purchase cryptocurrencies on margin or otherwise use cryptocurrencies to facilitate securities transactions should exercise caution, including ensuring that their cryptocurrency activities are not undermining their anti-money laundering and know-your-customer obligations. Statement on Cryptocurrencies and Initial Coin Offerings (Dec. 11, 2017). In addition, other laws and regulations, such as IRS regulations and state money servicing laws, may be implicated.
 The Supreme Court’s investment contract test “embodies a flexible rather than a static principle, one that is capable of adaptation to meet the countless and variable schemes devised by those who seek the use of the money of others on the promise of profits.” Howey, 328 U.S. at 299.
 “[T]he name given to an instrument is not dispositive.” Forman, 421 U.S. at 850.
 SEC Rel. No. 33-5018 (Nov. 4, 1969); Investment in Interests in Whisky, SEC Rel. No. 33-5451 (Jan 7, 1974).
 For example, some have raised questions about the offering structure commonly referred to as a Simple Agreement for Future Tokens, or “SAFT.” Because the legal analysis must follow the economic realities of the particular facts of an offering, it may not be fruitful to debate a hypothetical structure in the abstract and nothing in these remarks is meant to opine on the legality or appropriateness of a SAFT. From the discussion in this speech, however, it is clear I believe a token once offered in a security offering can, depending on the circumstances, later be offered in a non-securities transaction. I expect that some, perhaps many, may not. I encourage anyone that has questions on a particular SAFT structure to consult with knowledgeable securities counsel or the staff.