• Bitcoin makes a high of USD 7,520 but settles just above USD 7,200
  • China could be set to welcome its first blockchain ETF after receiving a proposal from Penghua Fund
  • US SEC Commissioner Hester Peirce believes regulations for crypto will move forward

 

After somehow managing to touch USD 7,520 (CoinDesk) , just as we thought it would have to yesterday, Bitcoin proceeded to fall back down to the usual USD 7,200 range where it continues to trade the Monday after Christmas.

It does not seem as if there will be any surprise moves for the remainder of 2019 as Monday begins to end for most of the world, and it would take a gargantuan buyer effort to pip USD 10,000 tomorrow, so suffice to say, we should expect Bitcoin to stay well within current levels as it enters the new year.

In any case, China is firmly on the map, and following the US, the China Securities Regulatory Commission has just disclosed that it has received a first application for a blockchain-focused exchange-traded-fund (ETF). The securities regulator said that Shenzhen-based asset manager Penghua Fund had filed the ETF proposal on Christmas eve. If successful, the fund would track the performance of a basket of publicly-listed stocks taken from blockchain-related businesses.

It would also be the first regulatory compliant blockchain ETF in China, says government financial mouthpiece Shanghai Securities Journal (SSJ). It is a timely application, given that Penghua Fund applied on the same day the Shenzhen Stock Exchange announced a Blockchain 50 Index to track stocks from listed firms that were involved as blockchain participants. So far, the list is said to include Ping An Bank, Midea Group and Zixin Pharmaceutical, who may very well be candidates for the Penghua Fund basket.

SSJ says that this is a watershed moment and, if met with successful approval, would set the path for other asset managers to file their own proposals. Despite the blockchain industry being new, SSJ says that the policy guidance has deepened, and many mature firms have come up, with a big potential to popularize the idea of domestic blockchain-themed ETFs.

Everbright Prudential Fund Manager Dong Weiwei was quoted by the SSJ as saying that such a secure and distributed technology had a keen potential to innovate a host of areas, including digital finance, Internet of Things technology and digital assets.

Will the US step up in view of this?

US Securities Exchange Commission (SEC) commissioner Hester Peirce believes so, revealing much positivism on the regulator’s recent efforts to update exemptions on securities offerings. About 2 weeks earlier, the SEC had already proposed several changes to the classification of “accredited investor”, making it a designation that would allow more people to access these offerings. Currently based on certain income and/or knowledge requirements, the concept tries to widen the definition for an accredited investor to acknowledge that there were crypto people who are able to understand the risks associated with early-stage investment.

Under Regulation D, accredited investors are allowed to participate in securities offerings who enjoy SEC registration requirements exemptions.

In the case of cryptocurrency, the SEC is already pursuing projects like EOS and Telegram, whose parent firms continue to say they are exempt from registration requirements. Commissioner Peirce was optimistic that proposed changes would bring about the desired results from the crypto sphere, but she went farther to ask

“We’re not really asking the fundamental question, which is, is this even a good framework to have? …The accredited investor is just one piece that we pulled out of it. That doesn’t mean that we’re not going to do anything with the rest of it. There’s interest — at least from me — in trying to see if we can do something to try to harmonize the exemptions. That’s a big project.”

In the end, hoping that ICOs would one day be exempt from securities law isn’t practical, Peirce suggests, but she does seem to think there could be space for flexibility. She talks about the so-called Token Taxonomy Act Token Taxonomy Act currently circulating in Congress that might help categorize coins, making the distinction between currency, utility coins and securities:

“The biggest thing the crypto community needs is a way to get from a securities offering to a utility token offering that is not covered by securities laws, or is not covered by the full panoply of the securities laws. You can’t get a token network up and running if you’re shackled by the securities laws.”

 

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