Weekly Blockchain Industry Report-29th Issue:
(October 27th — November 2nd, 2018)
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This week, the daily average global cryptocurrency’s market capitalization was $206.198billion, representing a 1.44% decrease from last week. Among them, the Top 5 cryptocurrencies’ market cap decreased by 1.03%;The daily average transaction volume was $10.209 billion, representing a 0.22% decrease. Meanwhile, the Top 5 cryptocurrencies’ transaction volume decreased by 14.18%. All of them displayed horizontal price movement this week, among them, BCH decreased the most, with the biggest drop in this week reaching 6.94%.
Among the top 10 increases of global cryptocurrency projects, Finance field accounts for 40%, and the biggest winner of them is REN, its maximum price increase was 52.47%.
Analysis of Top 200 Market Cap Projects
The market capitalization of the top 200 projects this week decreased by 2.27% compared with last week. Based on our classification of 4 categories: cryptocurrency and payment, basic chain and protocol, vertical chain and protocol, and vertical industrial application, among them, vertical chain and protocol sector experienced highest price decrease, which decreased 4.1%.
Through further classification of the vertical chain and protocol and the vertical industrial application sectors, it was found that E-Commerce sector experienced market cap increased the most as high as 38.58% and there are many projects of Content & Copyright sector dropped out of TOP 200 market, which decreased 33.11%
Analysis of Newly Listed Projects
According to latest announcements from more than 30 exchanges including OKEx, Binance, Huobi, Bitfinex, Bithumb, ZB.com, Upbit, HitBTC, Bittrex, Poloniex, there are 12 newly listed cryptocurrencies and 20 newly listed trading pairs. All of the newly listed cryptocurrencies are Cryptocurrency & Payment.
Analysis of Closed Public Offering Projects
There have been 88 closed public-offering projects this past week, with the soft cap totaling nearly 240 million USD. Among these projects, Cryptocurrency & Payment has the largest soft cap, exceeding 45 million USD.
Important News on Global Governmental Policies this Past Week
The US: The Securities and Exchange Commission (SEC) is investigating investment advisers who may be involved in cryptocurrency misconduct. It may strengthen regulation of cryptocurrency transactions. Its focus is on how investment advisers store their cryptocurrency assets, possible price manipulations, and the possibility of cyber-attacks on cryptocurrencies.
Russia: The Federal Financial Monitoring Service said that based on advice from the Financial Action Task Force, it will regulate crypto transactions in Russia.
China: The Chief Economist of the Ministry of Industry and Information Technology said that the Ministry will establish and perfect a mechanism for coordination between key enterprises, top universities, and research institutions, supporting blockchain startups. In particular, it encourages blockchain companies to work with customers across industries, pushes for public service platforms, and supports third-party organizations which evaluate blockchain services.
South Africa: The Ministry of Finance sought advice on revision of its tax bill. In some of the proposals, cryptocurrency is classified as a financial instrument rather than a technological R&D project, meaning that crypto-related companies will no longer get preferential tax treatment.
Hong Kong: The Securities and Futures Commission (SFC) will explore the suitability of regulating virtual asset trading platforms, and will observe operation of platforms within its regulatory sandbox. It will issue licenses to platforms that comply with the new regulations.
Japan: The Financial Services Agency recommended that the government regulate ICOs according to the Financial Instruments and Exchange Law in order to protect investors. The Japanese government may draft regulations similar to the securities law.
New Zealand: The Financial Markets Authority (FMA) released an annual report today to the effect that it will strengthen regulations on the cryptocurrency industry, deal strictly with non-compliant companies, and emphasize the pros and cons of cryptocurrencies and related investment products in public communications.
Keeping Up with the Blockchain Giants
Ma Shitao, director of IBM blockchain China, said that IBM will help companies develop and implement digital transformation programs based on blockchain.
Hitachi Payments has partnered with the State Bank of India to establish a joint venture and jointly develop a digital payment platform.
FinanceSN uses technologies such as biometrics, CSI AI, smart case analysis, and blockchain blacklist sharing to provide risk control for the entire process before, during, and after the “Double 11” single’s day shopping festival.
JPMorgan’s blockchain project Quorum will be used to tokenize gold bars. Quorum Blockchain was jointly developed by JPMorgan and the Enterprise Ethereum Alliance. Quorum tokenizes and digitizes assets using blockchain technology so that they can be transacted on distributed ledgers.
Microsoft’s Azure service will be integrated with the Nasdaq financial framework, the two companies announced. The two companies will work together to build a blockchain system to help Nasdaq’s customers use different technologies bringing together buyers and sellers in an easier way, and facilitating management of payment and settlement.
Ant Financial CTO Cheng Li said that the company will further expand its blockchain business over the next three years. Its will mainly focus on three fields: cross-border payments, blockchain application in supply chain financing, and government affairs.
The Bitcoin ATM operator Coinsource has received a virtual currency license (BitLicense) from the New York Department of Financial Services. Residents of New York State will be able to purchase and sell bitcoin in cash using Coinsource’s ATMs.
General Electric (GE) will build virtual power plants using blockchain technology and develop an industry standard to enable devices on the energy network to record their status, capacity and throttling capability.
Hot Topic this Week: the Hong Kong SFC publishes new regulations on virtual assets
On November 1st, 2018, the Hong Kong Securities and Futures Commission (SFC) published a new regulatory framework statement for virtual assets on its website. The statement considers including virtual asset portfolio management companies, fund distributors and trading platforms within the SFC’s regulatory jurisdiction. Under this framework, there could be regulated exchanges in the Hong Kong market, allowing investors to participate in crypto investments through legally protected channels.
1. Highlights of the regulations
• After feasibility verification in the sandbox, the SFC may issue licenses to cryptocurrency exchanges.
• Funds and sales platforms relating to virtual currencies will only be allowed to trade with professional investors, and will be required to register in the SFC.
• Whether the cryptocurrencies managed meet the definition of “securities” or “futures contracts,” they are included within the scope of regulation.
• Only virtual asset portfolio management companies which intend to invest 10% or more of total assets in virtual assets are subject to the SFC regulation.
2. Analysis of the new regulations
• Two types of licenses
Funds selling digital currencies require a Type 1 securities dealing) license. Their specific businesses include providing clients with trading or brokerage services for stocks and stock options, buying and selling bonds on behalf of clients, buying or selling mutual funds and unit trust funds, and placing and underwriting securities on behalf of clients.
Funds managing digital currencies require a Type 9 (asset management) license. Their specific businesses include managing securities or futures portfolios or funds for clients under full authorization.
• Professional investors emphasized
The new framework emphasizes risks of virtual asset investment, and stipulates that virtual asset investors be professionals under the definition of the Securities and Futures Ordinance. By defining qualifications for investors, the SFC reminds retail investors (natural persons) not to make high-risk investments blindly, and to consider their own risk tolerance. This measure aims to protect investors’ interests and maintain the stability of virtual currency markets.
Appendix: Upcoming Crowdfunding Projects 10.27–11.2
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*Credits to Zhe Su for her superb research!