Showing posts with label securities. Show all posts
Showing posts with label securities. Show all posts

December 04, 2017

$300 Bln is a drop in the ocean, Bitcoin is still a baby and can’t be a bubble

By Darryn Pollock - November 27, 2017 (

Looking at the total market cap of the cryptocurrency market, which recently crossed over the $300 bln mark, it is both exhilarating and terrifying at the same time. This digital currency world that came into being less than 10 years ago has grown astronomically in such a short space of time.

Indeed, 2017 alone has seen just Bitcoin go from $800 to nearly $10,000, and there is still a month to go. The records have crumbled for the Big digital currencies, as well as the new ones as the boom in ICO’s have also help set unprecedented growth.

Thus, as the most impressive performing asset class ever seen, surely Bitcoin is on the verge of taking over the world? Even that has two ways of being viewed - in relation, or in fear - but, no, Bitcoin is a small fish.

Bitcoin vs Gold

Looking at the actual commodity markets out there, and weighing up Bitcoin’s $300 bln, it quickly becomes apparent that the digital currency is still splashing in the shallow end.

Gold, which Bitcoin is supposed to be challenging, has a market cap of $6 tln. On top of that, only about a fifth of all the mined gold is held for private investment purposes, the rest is either in jewelery - the large majority - or the official sector, or still underground.

Thus, seeing as the value of all gold mined comes in just over $7 tln, about $1.6 tln of it is being used for private investment purposes.

Look deeper at the markets. Equities, another investible asset, has a market cap of $55 tln; then there is $94 tln in securitized debt and $162 tln in residential real estate, according to a 2016 report.

Not even close to being overvalued

So, what does it mean if Bitcoin is a record breaker for speed, but not for size? It breaks down a lot of the bubble talk that is floating around there. For a market that only makes up 0.3 percent, when put next to residential estate value, securitized debt, equities, commercial real estate, farmland and gold, -- it can hardly be called a massive bubble.

When it comes to bubbles, and overvaluing, stock picker and Bitcoin Bull Ronnie Moas breaks down the numbers a little more.

“We currently have $200 tln in the world tied up in cash, stocks, bonds and gold alone and all four of those, in my opinion, are overvalued. If 1/2 of one percent of that 200 tln dollars ends up in Bitcoin, you are looking at a one tln dollar valuation that would be above where Apple Computers, the most valuable company in the World, is today.”

November 09, 2017

U.S. SEC still fuzzy on whether Tokens are Securities; but clearer on ICO requirements

By Tedra DeSue - November 09, 2017 (

The SEC may not have a clear answer on how to treat tokens, but it is continuing to search for ways to keep bad actors from ruining the unregulated, but booming ICO market.

U.S. Securities and Exchange Commission chair Jay Clayton continues to ring the warning bell over initial coin offerings.

During a speech before the Practising Law Institute Wednesday, he spoke about how to create a “thoughtful” approach to transparency that could enhance both governance and investor protection. Included in this topic were ICOs.

Let’s go over some of Clayton’s talking points.

Where’s the info?

In discussing the topic, Clayton said that he was committed to increasing transparency about SEC operations. He said the commission was also focused on transparency efforts that further the long-term interests of retail investors.

Clayton is concerned that there is a distinct lack of information about many online platforms that list and trade virtual coins, or tokens, offered and sold in ICOs. He pointed out that through these platforms, individual investors can buy and sell tokens in the secondary market using virtual or fiat currencies. 

“But investors often do not appreciate that ICO insiders and management have access to immediate liquidity, as do larger investors, who may purchase tokens at favorable prices. Trading of tokens on these platforms is susceptible to price manipulation and other fraudulent trading practices.”

To be, or not be, a security

The SEC recently warned that instruments, such as tokens, offered and sold in ICOs may be securities, and those who offer and sell securities in the U.S. must comply with federal securities laws. 

While it hasn’t provided any more clarity on that, the SEC has cautioned cryptocurrency exchanges must register as a national securities exchange, or operate pursuant to an exemption from registration.

In addition to requiring platforms that are crypto exchanges to either register as national securities exchanges or seek an exemption from registration, the SEC says it will keep on trying to provide clarity for investors about how to treat tokens.

Specifically, the SEC wants to provide clarity to investors on:

  • how tokens are listed on these exchanges and the standards for listing; 
  • how tokens are valued; and
  • what protections are in place for market integrity and investor protection.