Northern Trust to Open Doors to Crypto Hedge Funds

According to the estimates, Northern Trust manages and stores $10.7B
01 August 2018   466

The giant of the financial services sector Northern Trust, which occupies 486th line of the Fortune 500 list, helps its clients to get acquainted with the crypto-currency ecosystem. This is reported by the Forbes.

Founded 129 years ago, a Chicago firm focused on institutional investors, corporations and high-income individuals, opened part of its services for cryptocurrency hedge funds, while exploring the possibilities for integrating the blockchain into its private equity unit.

According to the publication, Northern Trust has been working for several months with three "mainstream hedge funds", which began including cryptocurrencies to their investment portfolios.

According to the estimates, Northern Trust manages and stores $10.7B. Currently, the company does not provide cryptocurrency storage services directly, but it offers administrative services, such as assistance in assessing investments, meeting anti-money laundering requirements and verifying third-party custody services, for hedge fund interest and institutional investors interested in cryptocurrency.

President of the Northern Trust for Corporate and Institutional Services Pete Cherecwich, in a conversation with Forbes, said that although officially his company adheres to a prudent position in the issue of crypto-currency, it is ready for the fact that in the future the currencies on the blockchain will be issued at the state level.

I do believe that governments will ultimately look at digitizing their currencies, and having them trade kind of like a digital token — a token of the U.S. dollar — but the U.S. dollar [would still be] in a vault somewhere, or backed by the government. How are they going to do that? I don’t know. But I do believe they are going to get there.

Pete Cherecwich

President, Northern Trust for Corporate and Institutional Services

Cherecwich also said that within the framework of his organization there is a team consisting of more than a dozen specialists in blockchain and direct investment who must create a set of tools based on a private version of the corporate blockchain system of Hyperledger Fabric.

Last year, the head of the Northern Trust called for "prudent" regulation of the detachment, noting that "databases have never been regulated," and the establishment of new rules in this area carries "potential threats" too fast.

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   41

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.