If the previous 365 days expected all unregulated cryptocurrency offerings (ICOs) to be replaced by regulated “security token” offerings (STOs), 2019 is shaping up to be the year we see that regulation might finally be implemented.
As a result of this change, here is the list of 5 crypto events on our radar for the coming 12 months:
1.A large bank will enter into crypto custody business.
The institutions are creating a storm. It is almost impossible to get through a day on crypto Twitter without someone relating the price of Bitcoin with the imminent entrance of the so called “institutional money”. So, it is hard to think that these “suits” won’t enter the community soon.The promises of the top two cryptos, Bitcoin and Ethereum, attracted professional traders in late 2017 and 2018. Most of the traders did stay throughout the latest downturn. With the SEC declaring BTC and ETH as currencies, the path towards institutional custody and trading isn’t far behind. We can expect JP Morgan or Goldman to enter the market, with perhaps BoNY joining them.
2. Several Traditional broker-dealers will open ATSs for STO trading.
The people interested in the crypto world are quite familiar with the term OFN, (open Finance Network). OFN is an alternative trading system which was recently license regulated. In major countries like the U.S and Canada, an ATS is a non-exchange trading venue that matches buyers and sellers to find counterparties for transactions. OFN is just the first of the kind of businesses that is expected to pop up. Recently, Coinbase purchased a broker-dealer, as did token issuance platform Tokensoft. In 2019, we can expect more broker-dealers (perhaps firms such as Entoro Capital, US Capital Global, or SeriesOne) to obtain licenses to trade in alternative investments like security tokens.
3. 2017 ICOs issued in the U.S will be the first security tokens traded on exchanges.
2018 saw restrictions, small raises, and tiny floats, so we can’t expect many of the 2018 STO’s we have heard about to trade on exchanges.Instead, we can expect “remediated” ICOs that have registered their shares with the SEC to be the first issuers to trade in volume on complaint exchanges. Ever heard of a Santa Claus for the security token exchanges?
Yes, you read that right. There really is a Santa for the security token exchanges. His name is SEC chairman, Jay Clayton. In 2018, Clayton put some presents under the tree in the form of Airfox and Paragon Coin, both ICos that received “orders” from the SEC forcing them to register. In other words, the first widely traded STOs will have started life as ICOs.
4. Asian investors and funds will pivot to the US to invest in digital assets
Asian investors have continued their dominance in traditional Bitcoin mining and IC0-driven crypto activity. However, in the last 6 months as the prices have dropped and latest technologies have entered the market, investor groups like Huobi and Binance and newer VCs like 8 Decimal, Alpha Omega Capital, Aurablock Capital, and Alpha Square Group are inverting the market and coming to the U.S. for its regulatory clarity. As the Chinese Government is looking to kick out STos, the Chinese investors have been especially active in the U.S based STO community, seeking to learn how to structure these offerings.This is exciting; the U.S. may in fact be a bastion of innovation in at least one realm of crypto, the kind that Wall Street and big investors prefer.
5. The SEC will approve several Reg A+ deals related to tokens
The JOBS Act Reg A+ exemption, for those who don’t remember, allows non accredited investors to fund startups. Ignored in the heyday of the ICO, Reg A+ is now considered a holy grail by those in crypto who oppose the idea of accredited investor requirements but still believe in playing by the SEC’s rulebook. Reg A+ lets a company raise up to $50 million annually via non-restrictive crowd fundraising, enabling a form of ICO that’s legal in the U.S.
When Circle acquired SeedInvest in Q4 2019, it laid the groundwork for some successful 2019 Reg A’s. Expect the SEC to approve several Reg A+ issuances this year with an underlying token, from firms like Issuance.com and SeedInvest.
Early movers and adopters in the Fintech industry are sure to see major gains in the future, and users are becoming increasingly clear on their preference for tech-based banking. Let us wait and watch what this year has in store for the Fintech world.