Tag: ICO’s

Will advertising regulators kill the ICO star?

On By mehranmuslimiblogIn Bitcoin, Blockchain, ICOLeave a comment

ico points

When Facebook announced it would not publish paid posts for ICOs, this was a strike at the heart of most ICO marketing campaigns and their social media teams had to quickly rethink their approach. However, Jonathan Keane, writing for Coindesk points out that there may be an even more “intimidating threat” around the corner, coming from global regulators.

Facebook’s statement said that it was banning “misleading or deceptive” adverts about financial products and services, with the emphasis being on anything related to Bitcoin and ICOs. In effect it was a blanket ban on all adverts for crypto startups, because Facebook can’t distinguish between the fair offer and the fake one.

This is just one marketing avenue but Keane quotes Johanna R. Collins-Wood of legal group Pepper Hamilton. She is a member of the law firm’s blockchain group, and she said: “The regulators will look at advertisements put out by the company. That’s always something they’re going to look at.”

Others are concerned about the large amount of suspect adverts for ICOs and crypto exchanges amongst others, and there are many who see it as an “immensely popular Wild West” where the legitimate business vies with the scammers for the same space. And, as Keane points out, “all the issuers and entrepreneurs in the space are still grappling with just what kinds of claims they can make in their marketing.” It is also certain that the blockchain industry needs to police itself before the regulators do the job for them and impose more stringent rules than is strictly necessary.

For example, on 22nd February, France’s stock market regulator, the L’Autorite Des Marches Financiers (AMF), released a statement about possibly curbing advertising on cryptocurrency-tied derivatives. This is not the only regulatory financial authority looking at the claims made in advertising; the SEC and CFTC are also examining the public statements made by companies in the sector.

The situation is made worse by the fact that there are no formal guidelines in place about what an ICO can claim in its marketing messages, and none of the advertising industry regulators have yet to formulate a policy. This leaves the blockchian-based startups in the dark, yet they are being penalised by platforms like Facebook. So, why not apply the existing rules for false and misleading adverts to the blockchain industry?

Here is what Keane discovered: “New Zealand’s Advertising Standards Authority told CoinDesk it had not received any crypto-related ad complaints, and the UK’s ad standards body said they had received less than 10 cryptocurrency-related ad complaints so far. A spokesperson from the UK Advertising Standards Authority responded to this by saying, “And none have resulted in us finding grounds for an investigation.”  The FCA, which does have a responsibility for financial advertising said, “it has no position on crypto ads.”

Currently the answer lies with lawyers who are telling ICO clients to comply with securities laws, and the expectation is that this compliance will eliminate any issues over misleading advertising. Google and Twitter also seem to believe that their existing advertising rules are robust enough to cover ICO adverts.

Meanwhile, many ICOs are policing their own messaging and have internal procedures that guard against any outrageous claims about low risk and large returns.

Will other channels follow Facebook, or like the advertising regulators, will they continue to take a ‘wait and see’ approach. I suppose we will also have to wait and see.

 

 

Telegram ICO raises initial $850 million

On By mehranmuslimiblogIn Fintech, ICOLeave a comment

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Telegram is the chat channel of choice for ICO and cryptocyrrency fans., so it is perhaps unsurprising that it has already raised an initial  $850 million in its pre-sale stage, as part of its billion dollar ICO.

The company filed a document with the United States’ SEC confirming that the money raised is to be used “for the development of the TON Blockchain, the development and maintenance of Telegram Messenger and the other purposes.”

Investors in the pre-sale were largely venture capital firms and large investors who received significant discounts in order to attract them. According to Bloomberg, the target figure was originally $600 million, but demand pushed the end figure up to $850 million. Bloomberg has also previously suggested that the public sale component will expand to $1.15 billion, bringing the total raised to nearly $2 billion if successful.

It is big news, because this is going to be the biggest ICO to date judging by the pre-sale figure. According to Tokendata statistics, if the Telegram ICO goes as anticipated and raises over even one billion, the second largest ICO –for Filecoin–only raised a mere $257 million. And Tezos, hyped as one of the most successful ICOs at the time, is in third place with $232 million.

To date, Telegram has been privately funded by its inventors, brothers Pavel and Nikolai Durov. The two Russians had previously set up VKontakte, the Russian answer to facebook, but had to leave their home country after a clash with investors.

The demand for telegram tokens is undoubtedly due to its unique position within the crypto community. Its messaging app is used by the majority of ICO projects, with its group feature particularly popular with crypto watchers. The Durov brothers have announced plans to develop Telegram’s services and deliver distributed file storage, a proxy service for creating decentralised VPNs and micropayments services amongst other things. It has already introduced new versions of its messaging apps for Android and iOS. Will the Telegram ICO be the biggest in 2018? We’ll have to wait and see.

 

 

 

 

 

 

 

 

Facebook interested in cryptocurrency

On By mehranmuslimiblogIn Fintech, ICO, Initial Coin OfferingsLeave a comment

facebook-gives-businesses-free-access

If you think about it, the news that Mark Zuckerburg is looking at cryptocurrency with a view to decentralising Facebook should come as no surprise. In fact, he seems to have been rather slow at getting ahead of the blockchain curve, but he may have been taking a ‘wait and see’ approach up until the end of 2017. By that time, he really couldn’t escape the growing momentum around the blockchain in the mainstream media, of which Facebook is now a part. And, with such a massive global network that is also one of the prime platforms for ICO announcements, there is something of the ‘no brainer’ about Zuckerburg’s announcement.

He said on 4th January 2018 that he “plans to study cryptocurrencies and other decentralizing technologies as part of a larger bid to improve the social networking service he co-founded.” In fact, he called it a “personal challenge” to understand all aspects of cryptocurrency and encryption. He also, rather ambitiously, plans to “fix important issues” in the media, technology and government, and is bringing together a group of experts to help him.

Naturally, the moment his announcement about his interest in cryptocurrencies and decentralisation, there was a buzz in the blockchain community that spread faster than wildfire, such is the impact of the social media mogul. He also said that cryptocurrencies were one of the most interesting questions in technology today and appeared to lament the fact that many had lost faith in “technology as a decentralising force.”

He added: “There are important counter-trends to this – like encryption and cryptocurrency – that take power from centralized systems and put it back into people’s hands…I’m interested to go deeper and study the positive and negative aspects of these technologies, and how best to use them in our services.”

It will be interesting to see how long it is before he makes some further announcements about the blockchain. He can call on the best advisors anywhere in the world, and it seems unimaginable that he will ponder on it for any great length of time before taking some kind of action. He will surely want to leverage some ‘first mover’ advantage for his social media empire. And, as we have seen before; where Zuckerburg goes, plenty will follow.

 

 

The emergence of Neobanks and Cryptobanks

On By mehranmuslimiblogIn Bitcoin, Blockchain, ICOLeave a comment

60266854 - stack of bitcoins with swiss franc bills. 3d illustration.

There is a neobank called Revolut, which is adding 3,500 people daily to its digital bank because it provides a store for Bitcoin. It doesn’t have a banking licence yet, but that isn’t stopping customers from joining and it has around one million accounts already.

What is a neobank?

A neobank is a concept that blends online banking, mobile apps, digital lending and personal financial management. They are consumer focused, have chatbots and replicate the conventional model of savings, lending and transfers. They don’t need to have a banking licence, nor do they need them, which some may find surprising. According to futurist and Fintech entrepreneur Lex Sokolin, tech statups can build user experiences and API those into financial backends from firms providing bank-as-a-service. He also points out that is exactly what Apple and Intuit did using Green Dot’s bank-as-a-service.

Then came the cryptobanks

The neobanks have been joined by cryptobanks. These replicate the functions of the traditional bank for customers and investors with crypto assets. Sokolin believes that the neobank and cryptobanks will soon blend together. Examples of cryptobanks, which are all retail banks, include Flinu and BABB in the UK, 2gether Bank in Spain and Change Bank in Estonia.

Both the neobanks and cryptobanks have raised money thorugh ICOs. Monza, a neobank poster child, raised €71 million and the cryptobanks are set to raise $150 million this year if some industry predictions prove correct. If the trajectory follows ICO funding in general, we will see the exponential rise in financial institutions dedicated to crypto continue.

Europe is first mover

When you look at the rise of these challenger banks, one noticeable aspect becomes clear; most of them are based in Europe. In fact, the majority have their HQs in the UK. That’s where you’ll find Revolut, Monzo, Pockit, Monese, Atom, Starling Bank and Tandem. The reason that Europe seems to be hosting so many neobanks and cryptobanks, rather than the USA, which might seem the more likely home for them, is that international money transfer in Europe can be priced at nearly zero by the digital banks. This gives these challenger banks an advantage over the conventional banking community. This matter more in Europe than it does in the USA, because markups on credit card use and foreign exchange make travel expensive for Europeans. This doesn’t affect the American consumer to anywhere near the same extent, as the dollar is used throughout the USA, whereas Europe has a greater range of currencies, so neobank and cryptobank services don’t have the same appeal for Americans, who are more focused on personal financial management.

Where next?

Where will they emerge next? It is likely that failing third-world economies will see a rise in the presence of cryptobanks. We have already seen in the last week in Zimbabwe, during the fall of Mugabe, that the people flocked to digital currency because the country’s currency is in such bad shape. It is not the only example of the growing adoption of cryptocurrencies in weaker economies, and we can expect to see much more movement towards crypto in the coming year, with an accompanying demand for institutions that can service customers with crypto assets.