54.8% of Publicly Funded Cryptos Could Be Securities in FINMA's Eyes, CryptoCompare Research Finds

Out of the top 200 cryptoassets, 78.5% would be classified as “receiving some sort of funding” and, out of these, over half would be considered securities by Switzerland’s financial supervisor, the Financial Market Supervisory Authority (FINMA), research found.

This according to CryptoCompare’s Cryptoasset Taxonomy Report, which followed guidelines FINMA set earlier this year to support initial coin offerings (ICOs). These determined there are three different token categories: payment tokens, utility tokens, and asset tokens.

As CryptoGlobe covered at the time, payment tokens are those that are set to only be used as a payment method. Utility tokens are those “intended to provide digital access to an application or service,” while asset tokens represent a share in a company or earning stream, or an “entitlement to dividends or interest payments.”

CryptoCompare’s report noted that FINMA’s regulations are clear on non-functional tokens that are tradeable – these are classified as securities. While asset tokens are also considered securities, utility tokens only fall into the category if they also or only have an investment function. Payment tokens, if functional, aren’t securities.

The global cryptocurrency market data provider’s report, using FINMA’s classifications, determined 65% of the top 100 cryptoassets by market cap are utilities, while 22% are payment tokens. The remaining 13% are “either asset tokens or combination use-cases.”

Breakdown of cryptoasset categories

Further, the report found that out of the top 200 cryptoassets, 157 would be classified as receiving “some sort of funding.” It further reveals that out of these 157 cryptoassets, “at least” 54.8% would be considered securities.

FINMA, earlier this year, clarified financial market laws and regulations aren’t applicable to all ICOs and, presumably, to all tokens. As such, the applicability of regulations to blockchain-based tokens will be determined on a case-by-case basis.

At the time, FINMA’s CEO Mark Branson noted the organization’s approach to ICOs was “balanced,” as it allowed legitimate innovators to launch their projects in Switzerland, while “protecting investors and the integrity of the financial system.”

ICO projects that issue payment tokens reportedly have to comply with anti-money laundering (AML) regulations. At the time Oliver Bussmann, the president of the Crypto Valley Association in the canton of Zug, predicted FINMA’s approach would increase the number of Switzerland-based ICOs.

P2P Token Trading Platform AirSwap Discloses ‘Critical Vulnerability’

  • Peer-to-peer trading platform AirSwap claims to have identified a "critical vulnerability" in one of its smart contracts. 
  • Ten addresses have been identified so far as being at risk of exploitation. 

Peer-to-peer token trading network AirSwap has disclosed a “critical vulnerability” in a newly released smart contract. 

AirSwap's Critical Vulnerability

According to the disclosure, which was published on Sept. 13, AirSwap’s internal security team identified a potential exploit in a newly released mainnet smart contract. The vulnerability would allow an attacker to “perform a swap without requiring a signature from a counterparty.” 

AirSwap claims that the offending code was only present for twenty-four hours on the network before being identified and removed. However, users of AirSwap Instant between Sept. 11 and Sept. 12 may have been affected by the vulnerability, with the report claiming that 10 accounts have been recognized so far as being at risk. 

AirSwap has published the addresses to the vulnerable accounts, telling all other users that no further action is required. The report also outlines the step-by-step actions taken by the exchange in the aftermath of discovering the vulnerability, including an apology to its client base, 

We would like to deeply apologize to our affected users for any inconvenience these vulnerabilities may have caused, and hope that the important lessons we continue to learn throughout these processes form the basis for a more open, secure, and efficient trading environment.

Featured Image Credit: Photo via Pixabay.com