SEC Doesn’t Regard Bitcoin and Ether as Securities

The Securities and Exchange Commission of US has disregarded ethereum as a platform for investment. Director of the division of corporate finance, William Hinman, said on Thursday that ethereum’s token, ether, cannot be supervised in the same way as stocks and bonds.

Earlier in April, Jay Clayton, SEC Chair, acknowledged bitcoin with the same sentiments. Both the statements can be considered to understand the outlook of America’s premier regulatory authority over digital currencies.

The recent remarks suggest that a digital coin can no longer be regarded as a security after it becomes significantly decentralized. On the contrary, most of the smaller tokens and Initial Coin Offerings are included into the bracket of investment vehicles. The distinction is important as securities have to be regulated like normal stocks.

Hinman said, “Based on my understanding of the present state of ether, the Ethereum network, and its decentralized structure, current offers and sales of ether are not securities transactions. And, as with bitcoin, applying the disclosure regime of the federal securities laws to current transactions in ether would seem to add little value.”

On the other hand, co-founder of Ethereum and founder of CosenSys, Joe Lubin was thankful for SEC’s decision. He was particularly pleased by the clarity provided by the authority. The co-founder affirmed that his digital coin would continue to transform the web through networks that are secure, fair and uniformly distributed.

As of now, there are hundreds of developers that use ethereum network for developing applications. The director of research at Coin Center, Peter Van Valkenburgh, said that software development and the network has sufficiently, and there is no third party upon which it has to relay.

The differentiation matters for the industry, as investors are able to distinguish digital coins from a common stock of a company, in which a person is providing funds based on a company’s capability of developing products and earn a profit.

But, it should be noted that there is confusion in regards to the initial investments made in the network being securities, as back then, ethereum was not completely decentralized. Hinman did not have any comments on the topic which hints that original investors who made the most profits might face regulations someday.

Other virtual coins have not been quite lucky as SEC has made them a subject to regulation as they normally raise funds to boost a start-up and its application. One should know that trading ether is not regulated but buying and selling tokens build using the ethereum network will be facing government control. ‘

Back in February, the SEC proposed the Senate’s Committee of researching digital currencies with the help of Congress and other federal and state colleagues. It was aimed to diagnose crypto exchanges and trading websites for taming the wild crypto space.

After, clarification over ether’s individuality it is hoped that many more investors will jump over the network to avoid paying taxes to the government. Similarly, investors would like to trade bitcoin as it has the highest chances of profits with the lowest government control.…

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Why Could Blockchain Be Useful in Tapping Kenya’s Informal Economy?

Blockchain technology is living up to the expectations of being a disruptive one of the decade. The technology is opening up an informal economy for the financial sectors in Kenya. The size of the informal sector cannot be ignored so easily though it might face some teething issues. Also, the effectiveness of the technology in the country could allow it to be explored in other parts of the world too.

Credit Worthiness

Small businesses like fresh vegetable stall have so far not been able to get the attention of the banks for loans. In fact, banks in Kenya could not resolve the issue of the creditworthiness of traders though the market size of the informal economy is pegged at around $20 billion in the country. The new age technology is being deployed to address the issues concerning the small traders if the banks could find a way to get their creditworthiness.

For instance, a 40-year-old woman is one among several small-scale retailers who could make use of her smartphone to gain access to loans. That would enable her to buy groceries like onions or bananas or tomatoes directly from producers while the delivery would be taken care by Twiga Foods Ltd., a startup firm of the country. As a result, the woman trader, Wacheke, is saved from making a trip to the market.

The procedure allows her to have a positive impact on creating a solid credit track record since it reduces her costs and saves considerable time because there was no need to bargain on prices. Bloomberg quoted her saying that “My prayers have been answered. In business, you need to be fast. The more you pay, the more you get bigger loans, and the more you can sell. It has really helped me.”

Twiga has deployed blockchain technology, which is also used to digital power currencies such as bitcoin, to observe how she manages her business. That included how she is ordering the stock and the habit of repaying. The application focuses on revenue from acquiring fresh wholesale products and then selling it to retailers.

International Business Machines Corp. (IBM) has developed this mobile blockchain platform, and this is one of the increasing numbers of apps that is focused on addressing the lack of finance issue. Obviously, this is one of the big stumbling blocks for the region to grow.

Informal Sector

A Nairobi-based development economist, Anzetse Were, pointed out the neglect in the data of the informal sector, which was suffering from access to credit. He said that there should be a proper strategy for the informal sector if the financial service providers want to break through the African markets.

The size of the small business is a big one in Africa. An International Finance Corporation data suggested that there was a lending gap of about $331 billion in the region. In Kenya alone, there are an estimated demand of $6.5 billion per year from micro, small and medium-sized enterprises. Wayne Hennessy-Barrett, CEO of 4G, indicated that Sub-Saharan Africa thinks that it would take some more time to create the financial structure required for MSMEs.…

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Japanese corporation starts offering Crypto secured loans

A major Japanese corporation has started offering secured loans to its customers against cryptocurrency funds. The company claims to be the first such service in Japan that offers Japanese Yen in loans by securing cryptocurrency funds as collaterals.

Abic Corporation announced on Friday that they will launch a new bitcoin loan service. The announcement read, “From June 1, we offer loans with virtual currency bitcoin (BTC) as collateral.” They wrote, “In Europe and the United States, services that provide ICOs [Initial Coin Offerings] and loans are increasing, with virtual currency as collateral such as bitcoins.”

The company added further, “Bitcoin secured loan is a service where [customers] can receive loans using bitcoin as collateral as its name implies, but it is Japan’s first service to receive [crypto-secured] loans in Japanese yen.”

The Tokyo based company, founded in 1973, has been in the secured loans business for more than four decades now. They are primarily involved in providing commercial and real estate loans. The company explained the reason they have added digital currency secured loans to their list of offering, suggesting the complex laws in this space. In Japan, an individual could pay as much as 55% in taxes. “In the case of individuals, if you sell your own virtual currency, the [capital] gains on that sale will be miscellaneous income and will be subject to progressive taxation,” said the company.

Selling cryptocurrency is a loss maker in Japan. The offering could help the users in getting yen against their crypto funds which could then be used “for a wide range of purposes such as new virtual currency purchases, [and] tax payments.” It helps users in getting access to their untapped funds, gain advantage of their investments and never have to pay hefty taxes.

Reports from news.bitcoin.com have claimed that 33 taxpayers in Japan with more than 100 million yen in digital assets have declared their assets in 2017. These funds classify as miscellaneous income sans pension income.

Abic Corporation is offering these loans for both individuals as well as businesses. The amount of loan could vary from 2 million yen to 1 billion yen. Loans will be available for a period of one month to 5 years with a maximum of 60 installments. A 20% delinquency charge is also added to the loans. To attract more customers, the company has declared that it would not take any prepayment fee. The annual interest payable on these loans could range from 2.98% to 15%.

The company added, “We will keep your [cryptocurrency] deposit and set the pledge…As a general rule, pledges are set in the virtual currency of the collateral, but it is possible to sell as soon as the market price rises.”

While the company is holding bitcoins as collaterals for the users, it will ensure that users get any forked coins arising in due course of time. It noted, “Even if you receive loans with bitcoins as collateral, there is no worry that the right in division will be lost.”

Recently, some Japanese exchanges had to face the ire of investors who filed a class action lawsuit against them for not providing them the forked coins.…

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