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.

Former Goldman Sachs Exec Shifts Portfolio to Bitcoin Ahead of Coming Economic Crisis

Michael LaVere
  • Former Goldman Sachs sales lead Raoul Pal predicts a "generational" economic crisis ahead.
  • Pal is shifting his portfolio to 25% bitcoin and 25% gold to prepare for the next 12 months. 

Raoul Pal, a former Europe hedge fund sales lead at Goldman Sachs, is preparing for a generational economic crisis by shifting more of his portfolio into bitcoin and gold. 

Pal said in a recent interview with Real Vision Group’s Howard Lindzon the global financial system is heading towards an economic catastrophe as a result of the coronavirus.  Pal predicted a 20% plunge in equities in the short-term and expects many businesses to fail in multiple sectors of the economy. 

He said, 

I think the balance of probabilities are that this is a much longer event in terms of the economic impacts… And I think it’s going to be the largest insolvency event in all history.

Pal called the coming recession a “generational change” and said it would have a lasting impact upon the psyche of younger generations, 

They will look upon, with some suspicion, the pension system which is going to fail in this. They’re going to look across securities markets in ways that they will think ‘this is just not for me.’ They will have different opinions on risk and savings than previous generations.

Pal argued millennials were scarred by the global recession in 2008, leading them to mistrust the financial system and seek novel alternatives.  He also revealed his portfolio allocation in light of the looming economic collapse, 

My allocation that I want to be in for the next 12 months probably, maybe longer, is 25% Bitcoin, 25% gold, 25% cash, and 25% trading opportunity.

Pal’s remarks preceded JPMorgan CEO Jamie Dimon’s address to shareholders on April 6, warning that “at a minimum” the market is heading towards a recession similar to 2008.

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