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.

U.S. Congressman Implies Facebook's Cryptocurrency Libra Is a 'Shitcoin'

Francisco Memoria

A U.S. Congressman, Warren Davidson, has recently implied Facebook’s cryptocurrency Libra is a ‘shitcoin’ after revealing he knows what he’s talking about when it comes to the cryptocurrency space.

Facebook has recently had to answers a few tough questions about Libra before a U.S. Senate Committee and while there were various memorable moments in the event, a Congressman implying Libra is a shitcoin has to be one of the most notable.

The representative from Ohio, while questioning CoinShares’ chief strategy officer Meltem Demirors, started by separating bitcoin from shitcoins, noting that people in the space are familiar with both terms.

A ‘shitcoin’, as most cryptocurrency enthusiasts know, is usually a term used to define cryptocurrencies that have no specific use case and should have no value. While some Bitcoin maximalists call everything that isn’t BTC a shitcoin, most use the pejorative term on the worst altcoins out there.

Through his questions, Davidson emphasized bitcoin has no central authority that can dilute the flagship cryptocurrency’s value, nor is there an authority that can censor BTC transactions. As Demirors noted, only the products and services people use can do that, but transactions on the blockchain are permissionless.

With Bitcoin, the Congressman added, users can engage in peer-to-peer transactions as if it were cash. Davidson added these features differentiate bitcoin from “many of the things people call colloquially shitcoin, because the value can be distorted by a central authority, so people do really have their assets at risk.”

The implication here is Libra, which will be governed by a central authority, the Libra Association, is a shitcoin because there’s a central authority able to artificially dilute its value and censor transactions. The social media giant's cryptocurrency is set to be launched next year, and will reportedly be backed by a basket of various fiat currencies and U.S. treasury securities.