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Securitize Gets FINRA Nod for Broker-Dealer/ATS Acquisition

Securitize Gets FINRA Nod for Broker-Dealer/ATS Acquisition

Security token firm Securitize said on Tuesday it got the green light from the US regulators to move forward with a duo of acquisitions, a broker-dealer and alternative trading system for digital assets.

The San Francisco-based startup, which helps firms tokenize their securities and assets, got such an endorsement to buy Distributed Technology Markets (DTM) in a bid to enter more regulated markets and reach institutional investors.

Distributed Technology Markets is part of a family of companies, and the acquisition will include taking over its sister company, Velocity Platform, which runs a money services business with money transmitter licenses in several states.

As part of the takeover, the newly acquired entity will be renamed Securitize Markets, which will offer a complete digital suite of services from primary issuance through secondary trading. Jonathan Kelfer, Co-founder and former CEO of Velocity Markets, has been named as the firm’s new CTO.

Securitize will soon be capable of offering blockchain-based securities and at some point to develop its own secondary marketplace, under the oversight of the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). This process gave the company firsthand insight into such processes.

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Regulators Clear Security Token Trading Systems

“By integrating Securitize Markets into our existing digital transfer agent platform and services, we can now offer a seamless digital solution for issuers and investors that dramatically improves the experience compared to the poorly digitized processes that are being used today,” said Securitize CEO and co-founder, Carlos Domingo.

Chris Wittenborn, CEO of Securitize Markets, also noted: “Securitize Markets is continuing the initiative of working hand in hand with regulatory bodies to construct a compliant capital markets framework for private securities – including digital asset securities. We’re excited to join forces with Securitize in an effort to continue developing this market.”

Securitize will capitalize on DTM’s regulatory approval to operate as an alternative trading system (ATS), which facilitates transactions in securities that are not publicly-traded. It creates a way for companies to tokenize equity and issue it on a blockchain without running afoul of regulatory obligations.

Many Fintech and blockchain firms have responded to US regulators’ classification of certain digital tokens as securities and therefore coming under the SEC’s supervision. Wall Street’s top watchdog says that ‎any entity that wants to become an ATS needs to register with the SEC as a broker-dealer and become a member of a self-regulating organization, such as ‎FINRA.‎

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Crypto.com Receives License from Malta Financial Services Authority

Crypto.com Receives License from Malta Financial Services Authority

Cryptocurrency exchange and app, Crypto.com announced today that it has received major regulatory approvals in Malta. The company has secured a Financial Institution license along with a Class 3 Virtual Financial Assets (VFA) license from the Malta Financial Services Authority (MFSA).

According to the official announcement, the company becomes one of the first crypto platforms in the world to achieve such regulatory approvals in the Maltese jurisdiction. Malta approved cryptocurrency laws in 2018 to regulate the market and since then, the European country developed a clear framework for cryptocurrency platforms to operate under MFSA.

The Financial Institution License obtained by crypto.com allows the company to offer payment services and issue electronic money. Through Class 3 VFA license, crypto.com can offer order execution, custody services, and account dealing to experienced and non-experienced investors.

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“We have a long-standing commitment to building a fully regulated business in every market we operate in. Being one of the first cryptocurrency platforms to receive in-principle approval for a Class 3 VFA License and a Financial Institution License is an important milestone and we look forward to securing licenses in more markets throughout 2021,” Kris Marszalek, Co-founder and CEO of Crypto.com, said in a statement.

Expansion in Europe

The company aims to achieve a competitive edge across Europe with new approvals. In recent years, Malta emerged as a hub for international crypto platforms. Leading cryptocurrency exchanges selected Malta as an important destination for global expansion. Malta introduced laws in 2018 to create a regulatory framework for blockchain and crypto companies but many companies were unsure about the exact requirements. Earlier this year, the Maltese authorities announced that the country was considering substantial measures towards the digital economy, including regulation of crypto platforms.

Finance Magnates reported last year about the intent of crypto exchanges to apply for MFSA license. The authority received ‘Letters of Intent’ from 34 prospective digital asset providers, including 21 cryptocurrency exchanges.

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KuCoin Resumes Deposits & Withdrawals of All Tokens After September Hack

KuCoin Resumes Deposits & Withdrawals of All Tokens After September Hack

Following a $275 million hack in September, cryptocurrency exchange, KuCoin announced on Sunday that it has “restored the deposit and withdrawal services of all tokens.” After a partial reopening that took place in October, this restoration of services is the exchange’s latest step towards a full recovery.

Indeed, in October, users on the Seychelles-based exchange were allowed to move their Bitcoin, Ether, and Tether Dollars on and off of the exchange; however, now users can move the full variety of tokens on and off the exchange even though certain tokens may have some withdrawal restrictions due to “ongoing judicial proceedings.”

A Devastating Hack

Still, the exchange may have a way to go before full functionality is restored. When KuCoin was hacked on September 26th, the original sum of stolen coins was reported at around $150 million. However, crypto analytics firm Chainalysis said that the number was closer to $275 million.

At the time, KuCoin said that the incident was being investigated by law enforcement and that users would not lose their funds: “rest assured, if any user fund is affected by this incident, it will be covered completely by KuCoin and our insurance fund,” a statement by the exchange said.

In a live stream that followed the hack, KuCoin Chief Executive, Johnny Lyu said that the heist was pulled off by hackers who had managed to obtain the private keys of the exchange’s hot wallets. However, as soon as the exchange saw that the withdrawals were happening, the remaining funds were transferred into new hot wallets and the old ones were abandoned.

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CoinTelegraph reported that the hack “mobilized a massive response across the cryptocurrency world:” after news of the hack went live, a number of projects chose to freeze their tokens or reclaim them from the hackers; some even initiated hard forks to help KuCoin retrieve stolen funds.

Life after the Hack: Challenges and Opportunities

While KuCoin appears to be on the road to recovery, the exchange is still dealing with several other challenges: KuCoin’s web domain is currently locked in Singapore. In the United States, KuCoin is embroiled in a class-action lawsuit.

Still, the company is moving forward on other fronts. Last week, Finance Magnates reported that KuCoin is planning the launch of a non-fungible token (NFT) exchange. NFTs are unique, ‘collectable’ tokens that have use cases in areas that include ‘artwork and GameFi’.

According to an announcement published by KuCoin, the NFT exchange platform will be fully operational within “the next few months.”

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DAiM Launches First Employer-Sponsored Bitcoin Retirement Plans in the US

DAiM Launches First Employer-Sponsored Bitcoin Retirement Plans in the US

California-based investment advisor for digital assets, DAiM announced the launch of the first employer-sponsored Bitcoin retirement plans in the US. DAiM is a licensed investment advisor for Bitcoin and other digital assets.

According to the official announcement, the investment advisor will serve as the plan fiduciary, and it will be responsible for the selection, benchmarking, and management of the investment offerings. DAiM will help companies create a 401(k) plan with up to 10% of asset allocation to Bitcoin.

The company partnered with Gemini Trust for institutional cold storage custody of digital assets, and the Bitcoin related to the newly launched retirement plans will be held in Gemini Trust. According to DAiM, new crypto plans are compliant with the Employee Retirement Income Security Act of 1974.

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Commenting on the matter, Adam Pokornicky, COO at DAiM, said: “We believe Bitcoin has demonstrated it has a place in the modern portfolio and individuals should have an opportunity to ‘Get Off Zero’ and invest directly through their retirement account. We executed the very first employer-sponsored 401(k) plan in October 2019 and have been diligently testing for the past year, now allowing us to launch scalable 401(k) plans that provide recordkeeping and administrative services. We’re proud to be a leader in regulated Investment Management services for Bitcoin and are excited to lend our fiduciary capacity to enable access to Bitcoin in 401(k) plans in this way.”

Significant Demand

The investment advisor plans to solve issues related to the conventional retirement plans including lacklustre investment options with low returns through new Bitcoin retirement plans. Additionally, the company mentioned a steep rise in demand for Bitcoin plans. “From the moment we were approved by the State of California in June 2018, we’ve seen incredible inbound demand from individuals eager to invest Bitcoin in 401(k)s. Conventional 401(k) plans are restrictive and often lack investment options, causing participants to not only be frustrated but have poor risk-adjusted returns that barely keep up with the rate of inflation. This is a bad deal for savers given the current environment,” Pokornicky added.

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Japanese Companies to Test Private Digital Yen

Japanese Companies to Test Private Digital Yen

After the decision of the Japanese central bank to test digital fiat, major private companies have now decided to participate in an experiment to launch a private version of the digital yen.

According to a Reuters report on Thursday, more than 30 major Japanese companies joined hands for the initiative. The group includes three major Japanese banks, brokerages, telecommunication firms, utilities and retailers.

The group has already decided that the private banks will issue the digital currency, but the roles of other participants are not clear yet.

The group is aiming to initiate the project next year, and the participants will conduct experiments for issuing a digital currency using a common settlement platform.

“We don’t want to create another silo-type platform. What we want to do is to create a framework that can make various platforms mutually compatible,” Hiromi Yamaoka, a former Bank of Japan (BoJ) Executive and Chairman of the group, said.

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Digital Yen on the Way

Last month, the Japanese central bank also finalized its decision to test a central bank digital currency (CBDC) and will start testing ‘as early as possible’ at the beginning of FY 2021, which starts in April.

Notably, the BoJ is also heading another consortium of several top global central banks, including monetary regulators in the UK, Europe, and Canada, in studying the feasibility of issuing digital currencies.

Unlike other major economies, Japan has a large share of cash transactions. Reuters highlighted that only 20 percent of the Japanese settlements are cashless, compared to 45 percent in the United States and 70 percent in China.

“Japan has many digital platforms, none of which are big enough to beat cash payments,” Yamaoka added.

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