Token Report Newsletter: Regulatory Heat Wave
The Telegram Open Network is now closed.
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Last week we compared the initial funding for Ethereum and its competitor ICO platforms. We have a correction to make, which is that we vastly under-reported the size of the EOS warchest; it is over $1.5 billion USD, not $700 million.
Surprisingly, the EOS public sale is not the largest reported amount raised by an ICO.
That whale-among-whales would be Telegram, who in February filed a Form D with the SEC, claiming to have raised $850 million dollars from private investors. Since that time, they have amended the total amount raised in their private sale for the “Gram” currency to coincide with the planned “Telegram Open Network” to…are you sitting down?…over $1,700,000,000.00. Really.
To put that in perspective, here is how EOS and Telegram’s funding compares to tech IPOs, and the total ICO market:
It would be difficult to imagine how Telegram could be in need of raising more capital, even after reading about their tremendous aspirations for TON in their whitepaper, which include “a distributed file-storage technology,” “decentralized VPN services,” and “smartphone-like friendly interfaces for decentralized apps and smart contracts.”
Indeed, Telegram has sent a strong, pre-public sale signal that they don’t need any more capital to build TON by…canceling the public sale entirely. Pundits observe, this decision was primarily made in an effort to limit Telegram’s risk of facing regulatory action, especially as it relates to US securities laws. A public sale is beyond the bounds of a Form D exemption, and could have subjected Telegram’s assets to seizure by US authorities, among other liabilities.
So, contrary to what bots might try to trick you into believing on Twitter, the “public sale” for Telegram’s GRAM cryptocurrency is never happening.
Even though the “public sale” is cancelled, that does not mean you can’t buy GRAM today. In fact, many private investors have been “selling large blocks (or tranches)” of GRAM they purchased in the presale, some at over a 100% markup. Telegram may be concerned about selling more GRAM, but GRAM holders are apparently not.
Speaking of regulation fears…I don’t think the founder of a company who is currently operating in protest of the Russian government banning their platform, after refusing to provide de-encryption abilities in order to protect privacy, is also highly concerned over what the US Securities and Exchanges Commission thinks of their company’s funding plans.
As far as the public knows, Telegram is moving forward with the building plans of their service. A service for which there is likely to be plenty of demand, regulation notwithstanding.
Actually, there might even be more interest in the GRAM currency and the Telegram Open Network because of regulation concerns. This can be illustrated by looking at where ICO regulation is currently the most strict (from Bloomberg’s Crypto publication), and comparing it to Google Trends search volume for “ICO”:
Looking at these two side-by-side makes it appear that tougher regulations on cryptocurrencies have the opposite of a dampening effect on interest in ICOs. For Telegram, this can be good news; strict regulation could end up growing their user base. Telegram’s big decision moving forward will be in how they distribute their GRAM currency and integrate it with TON once it is live.
Crypto Climate: ☀️Regulatory Heat Wave🌡️
Crypto is in the hot seat this week; for instance,
- Investors who sustained a loss from purchasing cryptocurrency issued by Ripple Labs have filed a class action lawsuit against the company, alleging that the company’s sales of XRP break state and federal securities laws — The Merkle
- Today, May 7th, senior CFTC and SEC officials will be “discussing the possibility of regulating cryptocurrencies”; specifically, whether Ethereum fits the definition of a security — The Street
- CryptoUK, a “crypto trade group,” has officially requested that cryptocurrencies be given specific regulations in the United Kingdom, including a proposal for a “Crypto-License” for KYC/AML operations — CCN
Apparently, some like it hot.
1 Short Read: Our New ICO Category Structure
In this write-up, Seline Jung, Token Report’s research lead, describes our 59 new ICO categories, how we migrated our database to this taxonomy, and some new market dimensions it will allow us to visualize.
For now, here’s our most popular ICO categories:
Last Week’s FOMO & FUD
You don’t have to believe any of it, but here’s what the Internet was saying about people and projects in crypto last week.
FOMO:
Mastercard filed for a patent on their system of “fast tracking navigation of blockchains” — CCN
Thomson Reuters released a survey which found “1 in 5 financial firms are considering cryptocurrency trading” — Blockchain News
Samsung announced a 58% boost in operating profits over last year, an earnings increase which was “on the back of high-performance computing chip orders” (see: ASICs) — Bitcoin.com
FUD:
JP Morgan filed for a patent on “a system that uses distributed ledgers to record payments being sent from one bank to another using a peer-to-peer network” — Coin Desk
Coinbase doesn’t mind the perception of being a “Bitcoin Mafia”; that is, according to a partner at Blockchain Capital — NewsBTC
The Financial Services Agency of Japan (FSA) released a 5-point plan (in response to the Coincheck hack in January), saying they intent to take a “more hands-on approach” to regulating cryptocurrency exchanges — Bitcoinist
Who to Follow:
“Blockchain allows us to experiment with new economic systems without having to take over a country.”
from Getting Intimate With Ethereum Tokens by Julio Santos on Hacker Noon
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Contact us:
✉️ galen@tokenreport.com / kyle@tokenreport.com
Token Report is an independent financial information service founded by Galen Moore and Peter Vessenes. Galen is a financial journalist with a background in startups, venture capital and launching news sites. Peter is a co-founder of the Bitcoin Foundation, and launched the first VC-backed Bitcoin company in 2011. He is managing director at New Alchemy, a boutique consulting and investment group based in Seattle, Wash., that is making a pre-seed investment in Token Report.
Nothing contained in Token Report materials or posted at tokenreport.com constitutes an offer or a solicitation of an offer to buy or sell a security, financial instrument, or other category of asset, or investment advice or recommendation of a security, financial instrument or other category of asset. Tokens involve risk and are not suitable assets for everyone. Token Report believes its information was obtained from reliable sources but does not guarantee its accuracy or completeness and accepts no liability for losses arising from the publishing of this information. The information provided by Token Report is not a substitute for financial, legal and other professional advice. Each individual should always consult his or her own financial, legal or other professional advisors and discuss the facts and circumstances that apply to the individual.
