BitDigest October 2 · Issue #755

• Crypto prices drop 5% as US CFTC charges BitMEX with evading US regulations
• The ECB issued a report outlining the benefits of a digital currency stating the Eurosystem needs to be ready to issue the digital Euro
• Venezuela is developing a decentralized stock exchange to help citizens evade global sanctions

Regulatory Warnings

This week saw major announcements from US regulators taking action against unregistered crypto projects. The SEC won a summary judgement against social-messaging platform Kik for its 2017 ICO, and settled charges against Salt Lending for its unlawful raising activities around the same time. And the week ended with a major announcement as the CFTC filed charges against BitMEX for operating an unregistered trading platform (see below). While the crypto industry continues to request greater clarity from regulators, the response against unregistered securities (as defined under the 1946 Howey Test) continues to shed light on the government’s negative feelings toward 2016 – 18s initial coin offerings. Quoting the SEC’s list of 5 Things You Need to Know About ICO’s, #1 “ICOs can be securities offerings” and #2 “They may need to be registered.” That said, I believe the statute of limitations is that that charges under the 1933 Act must be brought within one year after the violation upon which it is based, but in no event more than three years after the security was first offered, so expect a lot more activity culminating by the beginning of next year.

NFTs, the Next Crypto Asset Class

Interest in non-fungible tokens is gaining greater interest from financial investors. Last week venture fund and digital currency research firm Delphi Digitalannounced it had invested $160,000 on digital battle pets and cryptoasset investment firm Block Tower Capital is planning to allocate $10 million to this theme over the next 6 month.  In addition to these efforts, Sfermion announced the first firm I have diligence “investing and actively supporting metaverse-native digital asset projects.”While NFTs are collectables and in game tokens to many of us, others already see the appreciating and/or speculative value stored in these new assets. If you want to learn more about NFT’s I strongly recommend the NFT Bible.

Digital Diversions

The intersection of digital currencies, blockchain and gaming continues to evolve and interest me so I am going to start sharing prominent stories in these fields under a new heading as part of my daily update.

Weekend Reading

• The Digital Money Institute published its September Journal focusing on CBDC case studies in small island economies
• Cointelegraph released a primer on DeFi to draw a complete map of the industry through common conceptual patterns, recurring ideas, typical problems inherent to the decentralized setting, and the approaches to address them.

The Headlines

Market Data

Exchange, Custody and Product News

Digital Diversions