A Look Back at 2018: Witnessing the Evolution of Financial Systems in Action

2018 has been a bit rough for fans of cryptocurrency and ICO projects, but at the same time, there is hope that more clear regulations may help to bring digital assets mainstream. Here is a look back on the trials, tribulations, and milestones experienced by the digital token economy in 2018.

According to this helpful timeline published in bitira.com:

• In early January 2018, the US Treasury Secretary said that the department’s number one priority with crypto was to prevent its use in “illicit activities.”
• By February, the SEC had launched a probe and issued subpoenas to investigate crypto companies.
• On March 7th the SEC stated it would apply securities laws to crypto companies, including exchanges.
• On May 24th, the DOJ opens a criminal investigation into Bitcoin price manipulation.

As recorded in press releases on the SEC’s website:

• On November 8th, the SEC cracked down on EtherDelta for operating as an unregistered exchange.
• On November 28th, the SEC settled charges against Floyd Mayweather Jr. and DJ Khaled for failing to disclose payments received in promotion of ICOs.
• On December 12th, the SEC ordered the executives behind the allegedly fraudulent ICO for AriseCoin to pay nearly $2.7 million.

Jake Chervinksy, an associate at Kobre & Kim law firm, told Bitcoin Magazine that he believes the SEC’s actions are to “establish a baseline for enforcement in 2018, one that sets a precedent for how the agency views the burgeoning ecosystem of token offerings.”

Interest in security tokens or digital securities rose from the ashes of the post-crypto apocalypse (if you think calling it the crypto apocalypse is dramatic, note that the price of Ethereum lost over 90% of its value over the course of 2018). Given the ambiguous regulatory status pertaining to even the most established of cryptocurrencies (the SEC deemed ether to not be a security due to sufficient “decentralization”), the development of security tokens should not be surprising. Indeed, when looked at from the perspective of an experienced investor, the digitization of securities assets is but a long-awaited inevitability. The industry simply had to hold out for a technological invention that would render digitization possible.

The digitization of alternative assets, in particular, could dramatically increase liquidity in a market that has been historically illiquid. The streamlined settlement processes enabled by blockchain technology ensures that buyers and sellers of digital securities can find a match much faster than they could previously. Fractional ownership of non-fungible assets such as real estate and rare art further expands the pool of potential investors in this fast-growing sphere.

The benefits of digital securities combined with the need for compliance with US securities regulations means that security tokens are likely here to stay; however, questions remain as to the fate of cryptocurrencies that are not registered securities. Perhaps many of the “utility” tokens of 2018 will register as securities and we will see an explosion of digital assets.

As always, be sure to keep up with our developments on social media:

Website: openfinance.io

Telegram: t.me/openfinancenetwork

Twitter: twitter.com/OpenFinanceIO

Medium: medium.com/openfinance

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Juan M. Hernandez is the Founder and CEO of OpenFinance Network, the trading platform for security tokens and other alternative assets. Juan is a serial entrepreneur, technologist, and polymath experienced in financial markets, exchanges, and blockchain technology. He holds a CS degree from Northwestern University and an MBA from the Kellogg Graduate School of Management.

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