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.

CoinBits Allows Users to Earn Passively By Converting, Saving Change in Bitcoin

Erik Finman, an early Bitcoin (BTC) adopter, has launched a crypto platform called CoinBits, which allows investors to passively invest in the flaghship cryptocurrency.

According to TechCrunch, Finman’s new app, CoinBits, intends to democratize access to cryptocurrency by allowing people from all walks of life to make small investments through commonly-used investment and savings strategies. These reportedly include roundups on transactions made via credit or debit card purchases.

The CoinBits app will also support conversion of fiat currency to bitcoin via regular transactions from users’ checking or savings accounts. While CoinBits has been designed to mainly benefit its users, Finman revealed that his own BTC holdings will also grow as more people use the small savings app.

No Commissions on Transactions, 98% of Bitcoins Stored Offline

As explained on CoinBits’ official website, users can invest small amounts such as $10, $25, $50, or $100 through the app’s web-based interface. The savings app also lets users adjust the risk level for their investments.

Notably, the CoinBits app does not charge transaction fees and 98% of users’ bitcoins are kept securely in cold storage (offline).

Explaining how investing in cryptocurrencies can be challenging for some people, due to their highly technical nature, Finman said:

Overall, investing in bitcoin is complicated and can feel almost impossible. CoinBits allows you to put that spare change in bitcoin. For example, if you spend $1.75 on French fries, that remaining 25 cents is invested automatically.

As noted on CoinBits’ website, the company handles withdrawals and users are charged a $0.50 fee for same-day processing. There’s also an option to download the transaction history associated with users’ accounts. This makes it easier for users to manage their finances and track how much they may have gained or lost on their bitcoin investments.

Crypto-Backed Lender Receives $25 Million in Deposits Two Weeks After Launch

As the crypto and blockchain ecosystem continues to evolve, many new startups have been offering different products and services which allow users to earn passively on their digital asset holdings. In March 2019, BlockFi Lending LLC, a New York-based “secure non-bank lender” announced it had received $25 million in cryptocurrency deposits just two weeks after launching its crypto-backed loans packages.

BlockFi’s investment packages allow users to earn interest on their Bitcoin (BTC) and Ether (ETH) investments.