TFU | Jan. 22-28

Leading Off

SEC Chairman Jay Clayton put the agency on “high alert” for ICOs and firms seeking quick gains from the digital currency craze; the CFTC sued crypto firm My Big Coin for allegedly running a Ponzi scheme using fake digital currency; Japanese digital currency exchange Coincheck was hacked for over $500M; Coinbase announced its 2017 revenue was over $1B; and blockchain was a notable topic of discussion at this year’s WEF conference in Davos.

In the News

Clayton puts SEC on “high alert” for ICOs.  Securities and Exchange Commission (SEC) Chairman Jay Clayton said he is instructing his staff “to be on high alert” for ICOs “contrary to the spirit of our securities laws.” The SEC is also “looking closely” at firms “shift[ing] their business models to capitalize on the perceived promise of [blockchain].”

CFTC files charges in crypto Ponzi scheme.  The U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against cryptocurrency firm My Big Coin (MBC) for allegedly using a fake cryptocurrency to scam investors out of $6 million. The CFTC charged MBC with commodity fraud and misappropriation of funds.

Banks and credit cards restrict digital currency purchases.  Some banks and credit card companies are reviewing their policies on allowing customers to purchase digital currencies using their products. Capital One already has prevented such purchases “due to the . . . elevated risks of fraud, loss and volatility.”

Firms collaborate on Singapore QR code initiative.  A coalition of “seven mobile wallets, acquirers and payment networks” are working to “push the adoption of a single QR code-based payment scheme in Singapore.” The firms, which include Diners Club, Mastercard, and UnionPay, are supported by the Monetary Authority of Singapore.

Coincheck hack costs firm over $500M.  The Japanese cryptocurrency exchange claimed that hackers stole over 500 million “NEM tokens,” worth about $500 million, making it larger than 2014’s hacking of another Japanese crypto exchange, Mt. Gox. Coincheck apologized and promised to refund tokens stolen from 260,000 customers.

China wants to integrate blockchain into financial services. China’s bank regulator published a white paper on the importance of developing and regulating financial technologies [full text]. In particular, it recommended integrating blockchain into China’s “financial service platforms [as] part of [China’s] future strategy.”

SoFi names former Twitter COO as its new CEO.  The online lender announced that Anthony Noto would become its new CEO, replacing founding CEO Mike Cagney, who left last year amid sexual harassment allegations. Some expect Noto to move SoFi toward an IPO in the next year or so.

Coinbase’s 2017 revenue topped $1B.  The cryptocurrency exchange reportedly earned $1 billion in revenue last year, as virtual currencies became mainstream and speculation fueled a dramatic surge in pricing. Coinbase earns money by charging both the buyer and seller a fee between 0.25%-1% of each transaction’s value.

House Financial Services Committee to host fintech hearing. On Tuesday, House Financial Services Chairman Jeb Hensarling will host a hearing entitled “Examining Opportunities and Challenges in the Financial Technology Marketplace.”

How cryptocurrencies may lead to lost tax revenue. In a recent NYT op-ed, two leading tax experts argue that one of the most significant concerns related to virtual currencies “may be the damage they can do, in the long run, to government finances through lost tax revenue.”  

Blockchain had Davos buzzing.  According to a report from Quartz, at last week’s World Economic Forum in Davos, Switzerland, ”it seemed that there was no problem too daunting that couldn’t be solved with blockchain technology.”

 

 

 

 

 

 

 

 

 

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