Off the Blocks | Vol 76, July 16, 2019
|Jul 16||Public post|| 4|
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Blockstack & Props | SEC Qualified Reg A+ Token Offerings
Last week was significantly epic in the annals of token history. The SEC approved not one but two security token offerings filed under Reg A+:
Both Blockstack and Props went to the press claiming they were the “First SEC-Qualified” Token. The tokens are now offered to both accredited and unaccredited investors in the US. Token holders will have a financial stake in the applications and network that these companies are building respectively.
The slight distinction between the tokens is how the offerings were structured.
In the case of Blockstack, the tokens worth $28M, are available for purchase in a cash offering. In addition, $12 million in tokens will be allocated to Blockstack’s App Mining Program, which rewards the developers who create the top-ranked applications within the Blockstack ecosystem.
For Props , App users who contribute value to the Props economy algorithmically earn Props Tokens that grant both in-app utility in the Props Network and a direct financial stake in the network they help grow. This model, allows for value to accrue with the users of the YouNow app and YouNow’s network of consumer oriented media applications.
Props Tokens cannot be purchased as part of this offering. They can only be earned by apps, users, and validators that will contribute to the Props Network.
That is a significant distinction between the two companies.
While this is good news for startups and the token economy in general, the roadmap for these tokens remains a bit fuzzy. There are significant questions related to their use, adoption as well as the regulatory environment under which they will operate.
Will these tokens always remain a security, or is there a chance that the digital assets that represent an investment contract today may change over time?
Will the companies themselves be registered as transfer agents or clearing houses or broker dealers?
Are these business models impacted by the FinCEN and must comply with money transmission laws or Bank Secrecy Act?
If these tokens are securities, do the Securities Investor Protection Act (SIPA) protections apply? This was a cause of concern for the SEC in its latest statement on custody of digital assets.
These questions will be resolved as more companies go down this path. The current financial infrastructure was built over decades, but it won’t take that long for the token economy to fully embrace a digital future.
Now some significant news form the world this week:
Tech | Samsung Quietly Releases a Blockchain SDK for Dapp Creation: Samsung quietly released access to what they’re calling Samsung Blockchain that “helps developers to manage blockchain accounts easily.” Access to the SDK is currently limited – users aren’t able to download the SDK directly but must request access – and it’s not clear when users will be able to experiment with the code let alone use it in production. Samsung also announced its own KeyStore, a device-based private key storage system within Samsung’s security layer, called Knox.
DApp does not need to make separate types of transaction that follows coin types by themselves anymore. The SDK offers a payment gateway for cryptocurrency remittance with its UI. To use this payment solution, DApp needs a keystore. With this, Samsung Blockchain SDK links users not only to the Samsung KeyStore but also to any external cold wallets as well.
Data Centers | How to Think About Blockchain Security in a Federal Setting: CIOs in and out of government are giving the go-ahead to innovative blockchain projects in a bid to explore the technology and its potential to improve operations and service delivery. But planning for a blockchain project is a little bit different than other IT jobs. Blockchain projects are interesting for other reasons; for instance, public record keeping projects, which might have fallen out of favor or gone nowhere with traditional methodology, might be adapted to blockchain, spurring renewed interest and funding. In these projects, the key component is the data structure — the blocks of transactions — being maintained on the blockchain. These chunks of data could be anything that needs to be shared but unchangeable, from public records of transactions to everyday procurement documents. Without this shared, distributed and persistent data structure, the other components of blockchain are irrelevant. Because blockchain is part of an application, and applications run on IT infrastructure, that means starting from something agencies know and understand very well: how to run and deploy applications on servers, whether in their own data center or out in the cloud. [… Read More on FedTech Magazine]
M&A | Blockchain Financial Firm Diginex Goes Public in Reverse Merger With 8i: Blockchain financial services firm Diginex Ltd. is scheduled to go public through a reverse merger with investment holding company 8i Enterprises Acquisition Corp. Subsequently, the firm will be listed on the Nasdaq. Diginex is reportedly going to close a reverse merger deal with 8i, which will reportedly amount to $276 million including debt. Diginex shareholders will reportedly get 20 million ordinary shares of 8i, valued at $10 per share. According to Diginex’s CEO Richard Byworth, the deal is set to ensure broader market visibility for the company. As such, Diginex will be “the first fully-diversified blockchain player on Nasdaq. [… Read More on CoinTelegraph]
Energy | Shell invests in Blockchain Clean Energy Startup: Oil and gas giant Royal Dutch Shell, commonly known as Shell, has invested an undisclosed amount in a New York-based clean energy startup. Shell joined Japanese trading giant Sumitomo Corporation to invest in LO3 Energy. The startup’s blockchain platform powers peer-to-peer energy platforms. LO3 operates the Exergy platform, which tracks the flow of energy as it’s added to a shared, local energy network. The Ethereum-based platform makes it possible for its users to verify with certainty that the energy they consume is sourced from renewable sources including windmills and solar energy panels. [… Read More on CoinGeek]
Tech | Buterin Proposes Bitcoin Cash Integration to Scale Ethereum in Short Term: Ethereum co-founder Vitalik Buterin has proposed to using the Bitcoin Cash blockchain as a temporary scalability solution for the Ethereum network. While the first stages of the Ethereum 2.0 shift are expected to come in early 2020, Buterin has now suggested deploying other blockchains as a new option for improving Ethereum scalability in the short term. Specifically, Buterin said the Bitcoin Cash blockchain is a perfect match for this purpose as the hard fork cryptocurrency provides a data throughput of around 53 kilobytes (KB) per second, as opposed to Ethereum’s 8 KB. Additionally, Buterin outlined three other compelling reasons for using the blockchain, including low fees, the readiness of necessary machinery and the Bitcoin Cash community’s openness to people using the blockchain “for whatever they want as long as they pay the transaction fees.” [… Read More on CoinTelegraph]
The Cleveland Cavaliers and Cavs Legion GC (NBA2KL) have partnered with cryptocurrency blockchain provider UnitedCoin. The partnership will bring awareness to the UnitedCoin brand and platform, while providing the Cavs with a resource to capitalize on the burgeoning financial technology landscape. UnitedCoin is a multicurrency transaction platform that uses blockchain technology—an advanced method of securing, storing and transacting data over the internet—to offer members a fully-regulated and insured service where they can trade crypto and traditional currencies. [… Read More on NBA.com]
As decentralized technology continues to evolve, we know it is important for us to stay ahead of the curve and plan for how it will impact our fan experience and business as we move forward. We are happy to team up with UnitedCoin, a like-minded company motivated by innovative technology to help us do that and are excited about how this partnership will bring blockchain technology to life for our fans.
- Nic Barlage, Cavaliers president of business operations
Proteum is a global blockchain advisory firm that works with public, private and start-up companies to help them transition into the world of blockchains and decentralized applications. We help companies strategically build their ecosystem and unique capabilities so that they can own and control their future. ProteumX, our accelerator program, invests in and accelerates the time to market for companies building blockchain solutions.