Telegram Delays Token Sale as the SEC Files for Injunction

Telegram is ready to push back their token sale following an injunction initiated by the US Securities and Exchange Commission over the sale of its Gram tokens.

The SEC ordered Telegram to stop the token sale with an emergency restraining order against Telegram Group, Inc., and TON Issuer, the two issuers of Telegram’s tokens listed in the Regulation D filing with the SEC in February and March 2018.

Telegram is ready to follow the SEC’s order for now and delay the token sale.

“Telegram has agreed to stipulate that it will not make any offers, sales, or deliveries of its expected cryptocurrency, called “Grams,” in order to maintain the status quo until this Court can resolve the legal issues at the heart of the matter,” the document reads.

Last Friday, the SEC filed the emergency action against Telegram to prevent it from distributing its Gram tokens, which the agency deems as unregistered securities. The regulator said Telegram failed to register a securities issuance and “committed to flood the U.S. capital markets with billions of Grams by October 31, 2019” — the deadline for TON’s launch.

In a letter to investors following the SEC filed order Telegram said that it has been working with the SEC over the past 18 months and has been surprised to see the lawsuit initiated by the agency. The company also accused the SEC of failing to advise Telegram on its blockchain project and token sale.

By voluntarily stopping the sale and distribution of Gram tokens, Telegram states that the injunction is no longer required, asking the court to deny the SEC‘s motion.

With all the issues around the token sale, it looks like Telegram‘s token launch definitely won’t stick to the schedule.

Following Telegram’s response on October 16, where the company argued that its native crypto is not a security and the preliminary injunction should be denied, the SEC has responded with a new filing in the U.S. District Court on October 17.

In the document, the agency insists that Telegram has actually violated the U.S. securities laws and that a preliminary injunction should be granted to prevent Telegram from further violation, mentioning that the company is likely to violate the law again.

Should the motion pass, this would be a massive blow to Telegram’s efforts who already raised over $1.7 billion in two pre-sale rounds, with major venture funds, including Lightspeed Ventures, Sequoia Capital and Benchmark as investors.

Bermuda – First Government to Accept USDC for Tax Payments

Bermuda has become the first government to accept the USDC stablecoin – a U.S. dollar-pegged stablecoin, managed by major players in the crypto market, Circle and Coinbase –   for tax payments, marking a milestone for cryptoasset adoption.

Global financial services company Circle published a report on Wednesday, confirming that the government of Bermuda will accept payments in USD Coin (USDC) “for taxes, fees and other government services.” The country will be supporting USDC as a method of tax payment for all its residents, which accounts for circa 65,000 people.

The latest development is a part of a broader initiative by Bermuda’s government, as stated by Circle, as its goal is to support the usage of USD-dollar backed stablecoins and decentralized finance protocols and services. The stablecoin launched a year ago by cryptocurrency exchange Coinbase and Circle. Up until now, over $1 billion worth of USDC has been issued between the two startups.

Circle co-founder and CEO Jeremy Allaire stated:

“Bermuda’s Premier made a broader announcement today about embracing stablecoins as the future of the financial system, with a focus on innovations in fintech that can deliver value not just for Bermudians, but also globally via company’s licensed under their Digital Asset Business Act.”

Allaire further explained that the country’s economy already relies on a United States dollar-backed currency, namely the Bermudian dollar. As such, he believes that “it’s natural that they would both embrace USD-backed stablecoins for their own government services.” He further added that Bermuda is currently focused on enabling financial services to be created and delivered using cryptocurrency and digital assets.

Allaire strongly believes that this new development reinforces the idea of global mainstream adoption of stablecoins for everyday payments and commerce.

Circle has also been granted awarded a “Class F” license under Bermuda’s Digital Assets Business Act (DABA) of 2018. According to the company, the DABA license makes the company the first major cryptocurrency exchange and wallet service ever to receive such a permit.

Allaire commented:

“Through the DABA, Bermuda is one of the first countries in the world to create a comprehensive regulatory framework for digital currency and digital asset-based products and services, including licensing of firms operating payment systems using stablecoins. It will be interesting to see how other governments will respond to this fundamental innovation.”

The Bermuda government launched a blockchain task force in partnership with the Bermuda Business Development Agency (BDA) in late 2017. It went on to pass legislation on initial coin offerings (ICOs) as well as establishing a regulatory sandbox for cryptocurrency companies.

Due to the favourable crypto conditions in the country, Circle has recently moved its exchange operations to Bermuda.

Following this news, it has also been reported that Bermuda will be partnering up with blockchain startup Shyft Network to launch a digital identity program, which will benefit business individuals, claimint that it will be easy to use and will provide better transparency and place the individuals in control of their identity-related data.

Grayscale Investments Registers Tripled Inflows in Q3 Led by Institutional Investors

Digital asset management Grayscale Investments, which offers investors access to Bitcoin and other cryptocurrencies in the form of shares, has published on Tuesday its third quarter inflows for 2019, marking a record of over $254 million in total investment into its products.

Accordingly, Grayscale provided details on the inflows in its Digital Asset Investment Report for Q3 2019 for the time period from July 1st 2019 to September 30th 2019.

The New York-based investment firm stated in the report that Q3 inflows amounted to $254.9 million, which is triple the $85 million it posted the previous quarter.  As such, inflows over the past year hit a record $412.M. In total, the firm manages over $2 billion on behalf of institutional investors, wealthy individuals, and hedge funds.

The report further shows that 84% of the new funds came from hedge funds and other institutional investors. Notably, total investments into Grayscale products from January 1st 2019 through September 30th 2019 reached $382.3 million, while the figure over the past 12 months is $412.3 million. Compared to previous quarters, the assets managed in the funds, excluding its flagship GBTC product, grew in total by $107M in the third quarter.

Currently, the digital investment giant operates a total of 10 funds tied to the cryptocurrency market, including ones tied to ZCash, Ethereum Classic (ETC), and its Grayscale Digital Large Cap Fund, which on Monday received clearance from FINRA to trade openly in the over-the-counter (OTC) market. Seemingly, this enables the first publicly quoted security based on a selection of digital currencies in the U.S.

Furthermore, the report shows that 67% of third quarter investments went into the company’s Bitcoin Trust shares, while virtually all the rest went to shares of other cryptocurrencies, Ethereum and Ethereum Classic.  As reported in July, Grayscale Bitcoin trust outperformed indices in the first half of 2019, up almost 300% on the year at the time.

Grayscale’s managing director Michael Sonnenshein attributed recent asset growth to the company’s #DropGold campaign, which launched in May and called on U.S. investors to abandon precious metals and join the Bitcoin movement. He further noted that the asset growth was being driven by traditional funds as well as investors, who decided to make digital currencies part of their portfolio mix.

“Most of our institutional investors are actually not crypto hedge funds,” he said. “It really runs the gamut — we have tons of global macros funds who maybe look at digital assets as a way to be short fiat money or thinking about all the economic and political turmoil going on globally.” 

Following the success of the previous campaign, Sonnenshein stated that a similar capaign will be launched within the near future.

Libra Marches on Following the Association’s First Member Meeting

The Libra Association – a consortium of companies who governs over Facebook’s proposed stablecoin Libra – held its first meeting on Monday in Geneva, Switzerland.

Following the meeting in Geneva, the twenty-one organizations formally signed the Libra Association charter as well as named its board of directors and formalized the consortium’s executive team.

As such, the five-member board is comprised of Calibra cofounder David Marcus, Andreessen Horowitz general partner Katie Haun, Xapo CEO Wences Cesares, PayU general counsel Patrick Ellis, and Kiva chief strategy officer Matthew Davie. PayPal veterans Bertrand Perez, Dante Disaprte, and Kurt Hemecker will comprise the Association’s executive team.

Most major decisions will require a majority vote of the ruling council, whilst proposed changes to membership or management of the reserve must pass by a two-thirds majority.

In addition to Calibra, the association consists of Coinbase, Xapo, Anchorage, Bison Trails, Creative Destruction Lab, Andreessen Horowitz, Thrive Capital, Ribbit Capital, Union Square Ventures, Breakthrough Initiatives, Illiad, Vodafone, Farfetch, Uber, Lyft, Kiva, Mercy Corps, Women’s World Banking, Spotify and PayU, according to a press release.

The news follows a string of significant departures of major companies such as Visa, PayPal, MasterCard, Stripe, eBay and Booking from the Facebook-led stablecoin project. Most announced their withdrawals from Libra citing concerns over the regulatory backlash faced by the project.

Still, according to the Libra Association more than 1,500 institutions have expressed interest in joining the project, with 180 meeting the organization’s membership criteria. In June, Facebook claimed a consortium of 100 companies would back the cryptocurrency project at launch.

However, the association shared no updates regarding those plans nor the exact launch date. Although Facebook initially targeted an early 2020 launch date, recent statements by CEO Zuckerberg have put this timeline into doubt.

Meanwhile, financial regulators around the globe have expressed their opposition to the project, citing fears that Libra could destabilize the global monetary order. Ministers in France and Germany stated they were against Libra and India announced that Libra may not even be legal in the country. Most recently, U.S. Rep. Maxine Waters (D-Calif.) called for a moratorium on the project until all regulatory questions could be cleared.

However, Calibra’s Marcus has claimed that these fears are misplaced. He recently testified before the U.S. Congress, trying to dispel the concerns of both the Senate Banking Committee and the House Financial Services Committee.  Mark Zuckerberg is also slated to testify about the project before the House of Representatives Financial Services Committee.

Despite regulatory backlash, the Libra Association remains optimistic about going forth with the project. Dante Disparte, the head of policy and communications at Libra Association, stated that the recent flight of major backers is “a correction; it’s not a setback.” Nonetheless, he admitted that any delay to the launch will be a result of its regulatory issues, rather than technical concerns.

Coinbase Receives E-Money License in the EU

Cryptocurrency exchange Coinbase has been granted an e-money license by the Central Bank of Ireland.

The news was published via a company blog, Coinbase UK CEO Zeeshan Feroz stating that the exchange is one of the very first firms to be granted the license from the central bank, following a Dublin office opening a year ago. He further stated that the license will enable Coinbase to process payments, issue e-money, and handle electronic money wallets.

In addition to that, the new license will help Coinbase expand its Irish operations, as well as help open up European Union (EU) and European Economic Area (EEA) markets for Coinbase customers. The development will also allow the San Francisco-based exchange to operate under their legal entity name.

According to a company statement:

“Europe represents a huge opportunity for Coinbase and today’s announcement is another positive step for us in the region. The approval from the Central Bank of Ireland will now enable us to expand our Irish operation and deliver a better product to customers across some of our fastest-growing markets. It will also allow us to secure passporting for our customers across the EU and EEA. “

Following the news, state-sponsored business development agency IDA Ireland – whose aim is to attract foreign investment to Ireland – asserted that this development is a net positive for the local financial industry.

CEO Mike Shanahan has explained that the exchange’s choice for a Dublin office reinforced the strength of Ireland as a hub for financial services companies, all the while providing a consistent, certain, pro-enterprise policy environment for businesses to grow and thrive.

The cryptocurrency exchange was granted a U.K. e-money license by the Financial Conduct Authority in March 2018, allowing the exchange to operate as a money service in the country.

Although the U.K. is still an EU member state, due to the impending Brexit it could affect Coinbase’s market reach. If it goes ahead, the separation would render Coinbase’s local license of limited benefit.

Earlier this month, Coinbase gained access to the UK’s Faster Payment Scheme via ClearBank following a separation with banking partner Barclays, which at that time temporarily caused deposit and withdrawal issues for users.