Chinese Bank to Issues $1.3B in Blockchain Securities

Bank of Communications joined forces with Commercial Bank of China and China Merchants Bank to conduct this project
27 September 2018   787

The fifth-largest commercial bank of China, Bank of Communications, used blockchain for the issue of residential mortgage-backed securities (RMBS). This is reported by CoinDesk.

The lead underwriter of the securities issue was China International Capital Corporation. Also, the two largest commercial banks of the country - Commercial Bank of China and China Merchants Bank - took part in it.

According to representatives of the Bank of Communications, the information on mortgage loans placed in the blockchain will allow RMBS participants to assess investment risks through 'due diligence' and process transactions in a peer-to-peer manner.

In August, one of the largest commercial financial institutions of China, Zheshang Bank, issued securities worth $ 66 million through its proprietary blockchain platform.

SEC May Signal Some Flexibility on ICOs

Looks like senior advisor for digital assets and innovation at SEC is not 100% against ICOs
14 December 2018   27

Some blockchain projects may be able to circumvent the requirements of US securities laws by contacting the Securities and Exchange Commission (SEC) for a so-called non-action letter. As SEC consultant on digital assets and innovations Valerie A. Szczepanik explained, such letters will not be issued often, but this does not mean that they cannot be received at all.

I think that’s a way forward for a lot of people who want to implement some of these things that may not exactly fit in the format of the rules that we want. 
 

Valerie A. Szczepanik

Senior advisor for digital assets and innovation, SEC

According to advisor, issuers of tokens have three ways to comply with the requirements of the laws: register an offer of securities, declare an exceptional case, or "make sure they're not a security."

In certain cases, the SEC may decide that “maybe this doesn’t fit the letter of our law or regulation but it fits the spirit and we can accomplish all the goals of investor protection”. In this scenario, the SEC may indeed issue such a letter, which will indicate that its employees do not recommend taking legal measures against a particular issuer.

The letters set forth exactly what the person plans to do or the entity plans to do and if it’s something that the SEC feels comfortable with we can release a no-action letter for exemptive relief saying ‘we can recommend no enforcement action.
 

Valerie A. Szczepanik

Senior advisor for digital assets and innovation, SEC

As reported, her remarks signaling a modicum of flexibility are notable in light of SEC Chairman Jay Clayton’s advice last month to anyone raising money by selling a token that they should “start with the assumption that it is a security.”

Speaking about the principles of recognition of tokens as securities, Valerie recommended to take into account the structure of sales. According to her, only in rare cases the token will not be recognized as a security. Most often, investors expect to profit from investments in such proposals, which is enough to recognize them as the spread of securities.