CRC Blockchain Industry Commentary - #2

Source: Messari.io

1) Telegram will delay launch of TON blockchain in light of SEC pressure

Source: CoinDesk

According to documents obtained by CoinDesk Telegram will delay the launch of its network to April 30, 2020. Originally planned to launch later this month, the Telegram Open Network (TON) mainnet would have distributed tokens to investors in earlier fundraising rounds, Earlier this week the SEC sued Telegram in order to prevent the distribution of tokens to U.S. investors in what the SEC called an "unlawful" sale of digital tokens. According to the documents Telegram told investors:

“We had intended to launch the TON network in late October. However, the recent SEC lawsuit has made that timing unachievable. We disagree with the SEC’s legal position and intend to vigorously defend the lawsuit. We are proposing to extend the deadline date in order to provide additional time to resolve the SEC’s lawsuit and work with other governmental authorities in advance of the launch of the TON network.”

CRC Commentary: Telegram, along with other projects such as Filecoin, Dfinity, have raised funds using SAFT mechanism with Reg-D exemption from SEC. This has been the most common way of selling tokens for blockchain projects in the US. However, earlier this week, SEC has sued Telegram in order to stop their token issuance and prevent the circulation of TON tokens in the US market. In their explanation, SEC have stated that there are several reasons for that urgent action: 1) Using SAFT mechanism to issue tokens doesn’t prevent these tokens to be considered as securities. 2) Telegram didn’t have any products/use cases for their tokens when they did the private sale. 3) It would be much more difficult for SEC to prevent the sale/resale of TON tokens if they get listed on any US exchanges. As a result, TON is delaying its mainnet launch and token issuance. This is an important case to watch and it will determine whether other SAFT tokens will be useful or not.

2) Market signals indifference towards assets listed as likely securities by the Crypto Ratings Council

Source: Messari

A few weeks ago, the Crypto Ratings Council (CRC) announced a new rating system between 1-5, with 5 signaling strong likelihood of being a security. Since the ratings were released, it appears the market has demonstrated either an indifference towards the asset's regulatory classification or the rating system itself.

Source: Messari.io

CRC Commentary: The members of CRC consist of well-known crypto firms such as Circle, Coinbase, Kraken, Genesis, Cumberland. The reason why they established CRC is to guide the regulators but also other actors in the crypto ecosystem when they assess the cryptoassets. Their assessment framework mainly relies on the Howey Test in the US. However, looking at their SFAR score, which is a scale between 1 and 5 and indicates the likelihood that this token might be considered as a security by SEC, SFAR score is still not taken seriously by the market players. That’s not surprising, because some of the top tokens by market cap are already known to be the ones that might be securities, such as BNB and HT. It will probably take more actions by SEC for investors to take SFAR ratings more seriously.

3) Coinbase eyes further European expansion after winning an Irish e-money license

Source: CoinDesk

Cryptocurrency exchange Coinbase has been granted an e-money license by the Central Bank of Ireland, CoinDesk reports. Coinbase UK CEO Zeeshan Feroz said the exchange is one of the very first firms to receive the license from the central bank, following a Dublin office opening a year ago. As CEO Mike Shanahan put it:

“Coinbase’s choice of Dublin for this operation reinforces the strength of Ireland as a destination for financial services companies, providing a consistent, certain, pro-enterprise policy environment for businesses to grow and thrive.”

CRC Commentary: Ireland is already home to many international companies because of its loose regulatory environment and discounted tax rates. It seems like it will also become a hub for cryptocurrency exchanges just for these two reasons. Coinbase already has some customer base in Europe but they are definitely behind Bitstamp and Kraken in terms of user numbers in Europe. This move to Ireland is unlikely to have immediate effects on their market share in Europe but as usual, Coinbase is playing the long game.

4) Binance just crossed $1 billion in cumulative profit

Source: Binance Blog

Source: The Block

Source: The Block

Source: The Block

CRC Commentary: Binance just completed its 9th quarterly burn for Q3, in which it burned nearly 2.1M BNB. This is more than in Q2 and Q3 combined. Since Binance burns 20% of profits, we can deduce that it made approximately $186 million in profit in Q3. This is the second-highest quarterly profit. These Q3 numbers are surprising. Binance's spot volume dried up in the last few months. The market has been dead and yet Binance just burned the equivalent of the second-best quarter in existence. This trend is even more apparent from looking at the average daily volume. The average daily volume in October is 2.6 times smaller than volume in June. What this indicates is that Binance must be generating a lot more from other branches - such as Futures and P2P OTC in China.

About CRC:

- CRC is a blockchain investment bank founded by senior executives from top investment institutions in China.

- We are dedicated to providing professional, international and institutional investment banking services to blockchain entrepreneurs.

- CRC has received strategic investments from Huobi Global, JLAB, Gobi VC, Cloudwise and U-nobleman, etc.

- CRC has recently closed subscriptions for its token fund, Blockchain Renaissance I, which is dedicated to support greatest value providers in the blockchain ecosystem.

- For more information, please visit: crc.capital

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