Security Token news for Week Ending Friday 3 April 2020

Security Token news for Week Ending Friday 27 March 2020Here is our pick of the 3 most important Security Tokens news stories during the week:

Telegram Aftershocks:  Court Bars Telegram from Distributing Grams Outside U.S. as Well; Covid-19 Adds Pressure for Investors to Accept Refunds

On April 1, U.S. District Judge P. Kevin Castel, responded to Telegram’s request for clarification as to the scope of the court’s March 24 preliminary injunction. He denied Telegram’s move to distribute tokens to its non-US-based participants.  Approximately $1.27 billion of the funds raised to finance the development of the Telegram Open Network (TON) came from overseas-based investors.

Why it matters:

This slam from the Court was not anticipated by everyone.  Some observers and players expected Telegram would be allowed to distribute Grams outside the United States. This week, lawyers for Telegram wrote to the Court asking for clarification whether the relevant laws were being applied extraterritorially. Some $1.27 billion of the funds raised in the ICO were derived from investors outside of the U.S. In slamming the door, Judge Castel derided the letter as Telegram’s attempt to relitigate, “really a motion for reconsideration in disguise”.

It is rumored many participants are now willing to take the refund offer from Telegram for a reputed 72% of the amounts invested, as the coronavirus disaster has created considerable opportunities for alternative investments, while at the same time disrupting all markets.  Cash is king.

Nomura Research issues first Japanese blockchain bonds, forms research consortium

Monday, Nomura Research Institute (NRI) offered the first Japanese blockchain-based digital bonds directly to investors. Last year NRI and Nomura Holdings created a joint venture BOOSTRY to develop a tokenized asset platform called ibet.

Two bonds were issued, with one of them referred to as a digital asset bond. Instead of paying interest, it provided redeemable points – the digital asset – for buying coffee. This was a 25 million yen ($232,000) bond with a three month maturity. The second five million yen bond was more conventional, offering a low interest rate.

Why it matters: Japan is moving toward with STO’s, led by Nomura. Nomura Institute of Capital Markets Research announced a new research consortium focused on blockchain technology in financial markets, including security token offerings (STO).  NTT is also a participant in another Japanese group, the Security Token Research Consortium initiated by MUFG, which includes Mitsubishi, Accenture, KPMG and startup Securitize.  Later this year, the Japanese Financial Instruments and Exchange Act will clarify the legal treatment of STOs and rights transferrable using distributed ledger technology (DLT). 

Major Security Token/Crypto Players Hunker Down during Covid-19 Crisis – e.g. ConsenSys operations and services unaffected

Ethereum (ETH)-focused major blockchain company ConsenSys is in remote mode. Already in January, ConsenSys began taking precautions to limit business travel, and as the situation escalated in February, the company transitioned to remote work. According to their spokesperson:

  • all of the operations and services are unaffected, and the level of commitment and support for the customer remains unchanged;
  • all offices are closed and the staff operates 100% remote;
  • the company is working with its third-party providers to understand the potential impact and develop adequate contingency plans to avoid any disruption to the customers’ businesses.

“With a global footprint, we are carefully monitoring the situation in each region. We have adopted social distancing best-practices early on to help flatten the curve of infections and there is full support for our employees and their well-being,” the spokesperson said.

The company started releasing more training materials, and they will have a number of online webinars and virtual events. They have launched their Enterprise and Developer Libraries, educational resources for developers and enterprises, while ConsenSys Academy released the first five modules of Blockchain Developer Program for free.

We have a self-imposed constraint of 3 news stories each week because we serve busy senior leaders in Fintech who need just enough information to get on with their job.

For context on Security Tokens please read the chapter on Security Tokens in our Blockchain Economy book and read articles tagged Security Tokens in our archives.

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