Zeus Weekly: Japan's STO Association, North Korea's Cryptocurrency, & BlockOne SEC Settlement

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⚡️ Hey Zeus Fans! Every week we share the latest news in the crypto and tokenized assets industry, with our comments and thoughts on why it’s important to us, and its users! Heres what’s been going on recently:

1. Rakuten, SBI, Monex Launch Japan STO Association

Six major Japanese brokerage firms such as SBI Securities, and Rakuten Securities have officially established the Japan Security Token Offering (STO) Association. The four other members of the new association include Nomura Securities, Daiwa Securities, Kabu.com Securities and Japan’s financial giant Monex, who is a subsidiary of Japan’s Monex Group and also owns the Japanese cryptocurrency exchange Coincheck. With headquarters located in Tokyo, Japan, the STO Association launched in order to support the development of STO fundraising by uniting their expertise in the industry, ensuring compliance with laws and protecting its investors. It will also aim to boost STOs as a fund-raising model in the country.

The STO Association will be chaired by Yoshitaka Kitao, CEO of SBI Holdings and an exec at Ripple Labs, with representatives from the other firms in various management positions. One of the members, Monex, has stressed the difference between STOs and ICOs, a type of fundraising where a company usually issues its own cryptocurrency. In the announcement, Monex emphasized that the ICO industry experienced some fraudulent cases, while issuance and trading of security tokens is legally recognized and its global popularity is growing as a new method of financing. Monex also revealed the new organization’s plans to obtain the certification as an Authorized Financial Instruments Firms Association in order to fully leverage its self-regulatory capabilities.

The Takeaway: This news marks the beginning of clearer regulations and compliance for companies looking to raise through the use of asset tokenization and security tokens. Japan has been at the forefront of adopting cryptocurrencies and now recognizes Bitcoin and other digital currencies as legal property. Part of the reason why the companies decided to unite is that this kind of offering is getting popular in the country. In this case, it will help to create an organization that will oversee the market and is close to the regulators at all times. It will also hopefully ensure investor protection by bringing in regulations in place to prevent illegal activities, such as money laundering.

2. North Korea Plans to Create its Own National Cryptocurrency

Image result for north korea cryptocurrency

Lately it seems that every week a new country announces plans on a new national cryptocurrency, and this week is no exception. First China, then The Marshall Islands, and now we have North Korea. It was recently announced that North Korea is working on building its own national cryptocurrency. However, many experts in the field believe that they are simply building their own cryptocurrency to get around tough international sanctions, potentially participating in money laundering, and even financing the manufacturing of weapons of mass destruction.

In recent years, North Korea has become very interested in creating its own cryptocurrency and has a sufficient level of competence to move forward with this plan. It was also reported that other countries have helped North Korea in the technical implementation of its cryptocurrency initiatives. In particular, several foreign companies have reportedly already signed contracts with the North Korean authorities for the development of blockchain systems for education, health care and finance sectors. 

The Takeaway: If used for illegal purposes, then this could possibly provide a negative spotlight for cryptocurrency and make it look like a tool used for fraudulent activity. However, if used for legal purposes, the cryptocurrency could possibly help North Korea get out of its current economic troubles. If executed well, this will be yet another turning point in the history of crypto serving as a stepping stone for other nations to follow, and can provide inspiration for the future. 

3. BlockOne Settles With SEC Over Unregistered ICO

The United States Securities and Exchange Commission (SEC) has reached a settlement agreement with BlockOne to pay $24 million in penalties for conducting an unregistered initial coin offering (ICO). On Sept. 30, the SEC announced in a press release that it has settled the charges against the firm behind the EOS network in the form of a civil monetary penalty. BlockOne settled the charges without admitting or denying these findings.

The SEC said in a press release that BlockOne raised a total of $4.1 billion over a one-year period in an unregistered ICO. The $24 million fine is not expected to make a significant dent, as it only represents a small portion of the $4 billion initial raise, amounting to only 0.58% of the initial raise. According to the SEC, BlockOne did not provide ICO investors the information they were entitled to as participants in a securities offering. Shortly after publication, BlockOne issued a statement on its website:

“We are excited to resolve these discussions with the SEC and are committed to ongoing collaboration with regulators and policy makers as the world continues to develop more clarity around compliance frameworks for digital assets.”

The Takeaway: This could potentially set a horrible precedent for other companies thinking of issuing a token. For example, Blockstack recently completed the first SEC approved token offering, raising $23 million. However, Blockstack spent 10 months and about $2 million getting SEC approval for its sale. That’s 8.7% of the total raise in contrast to 0.6% that BlockOne had to pay to the SEC. So why would other companies want to follow in Blockstack’s compliant footsteps, when they can just promise a ton of awesome (undeliverable) features, advertise on Times Square, raise a ton of cash that they can use to pay for really good lawyers and then get away with it? The answer is - we have no clue. But hopefully it doesn’t pave the way for other companies to take advantage of the phrase “It’s better to beg (pay) for forgiveness, than to ask for permission”.


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