By: John Wu, CEO of SharesPost Digital Assets Group
Last month, Jay Clayton, the chairman of the Securities and Exchange Commission, said he is exploring ways to give Main Street investors easier access to the enormous amount of wealth forming in the private markets.
People naturally—and correctly—assumed he was referring to stock in unicorns like Uber and Airbnb, emerging growth firms worth at least $1 billion.
However, though Clayton didn’t specifically reference it, his words would also apply to cryptocurrencies, specifically utility and security tokens. I believe the spirit he was trying to convey is that the SEC needs to provide small investors with better access to all high quality private investments, not just one specific asset.
The SEC’s mission includes three parts: protect investors, maintain fair and orderly markets, and facilitate capital formation. In other words, help businesses raise the money they need to expand and grow.
In 2012, President Obama signed the Jumpstart Our Business Startups Act (JOBS Act) to encourage more companies to pursue initial public offerings. But the law didn’t say companies could only pursue issuing stock. Instead, the JOBS Act created regulatory “channels” that would make it easier for private companies to raise capital in general and investors would ultimately benefit from that.
“It’s clearly good for entrepreneurs and businesses to have the funds needed to hire, grow, and compete,” Troy Paredes, a former SEC commissioner appointed by President George W. Bush, recently told SharesPost.“When the SEC facilitates capital formation – which is central to its mission – it benefits investors too by giving them more companies to invest in to boost their savings.”
What the SEC didn’t anticipate was the rapid emergence of Blockchain technology as a platform for companies to raise capital.
Initially, Blockchain was meant as a means to facilitate the buying and selling of Bitcoin. However, companies have been using Blockchain to raise capital through initial coin offerings (ICOs). Specifically companies are issuing utility tokens, which grants the user access to a service or a product, or security tokens, which can represent units of ownership in a company, just like a stock albeit in digital form.
In 2017, the total value of tokens grew to $37.7 billion, a nearly 19,000 percent increase over the prior year, according to CoinMarketCap and SharesPost research.Companies and investors raised $5.4 billion last year through ICOs.
So far this year, companies have raised more than $14 billion from ICOS, according to Coindesk.com. To appreciate the rapid growth of token sales, consider that U.S. startups (i.e., seed and Series A) last year raised an estimated $8 billion using traditional private placement.
In other words, an increasing number of emerging growth firms are raising capital not by just by issuing traditional equity through IPOs but rather tokens through private ICOs.
Like any new asset, coins and tokens have certainly attracted their fair share of controversy. Bitcoin prices have been extremely volatile. The SEC has cracked down on bogus ICOs and false claims related to Blockchain.
But the agency is doing what it has always been doing: fighting fraud. Though the SEC has not offered broad guidance on whether it will treat tokens as utility or securities, the agency has never said investors should avoid the asset altogether.
In fact, the SEC has done the opposite. The agency is laying the groundwork to provide stability and clarity to the crypto markets. It just won’t happen overnight. The SEC has established working groups to study the issue and appointed a top official to oversee digital assets.
“No conversation about recent efforts at the SEC to foster innovation would be complete” without mentioning Blockchain and cryptocurrencies, Clayton recently told an entrepreneurship conference in Nashville.
“Our efforts in these areas embody two key principles… 1) embrace new technologies that cut costs and provide new investment opportunities while 2) continuing to require that our retail investors have access to material information necessary to make an investment decision,” he said.
It’s worth noting that Clayton made these remarks in a speech that touched upon how the agency can better access the private markets. If Clayton didn’t think digital assets were part of the conversation, he would probably not even bother to mention them.
“We also should consider whether current rules that limit who can invest in certain offerings should expand to focus on the sophistication of the investor, the amount of the investment, or other criteria, rather than just the wealth of the investor,” Clayton said.
Given the amount of wealth already present in the crypto markets, “certain offerings” likely means assets beyond just unicorn stock.
Pandemic ‘shecession’ reverses women’s workplace gains
By Anuradha Nagaraj
(Thomson Reuters Foundation) – The coronavirus pandemic reversed women’s workplace gains in many of the world’s wealthiest countries as the burden of childcare rose and female-dominated sectors shed jobs, according to research released on Tuesday.
Women were more likely than men to lose their jobs in 17 of the 24 rich countries where unemployment rose last year, according to the latest annual PricewaterhouseCoopers (PwC) Women in Work Index.
Jobs in female-dominated sectors like marketing and communications were more likely to be lost than roles in finance, which are more likely to be held by men, said the report, calling the slowdown a “shecession”.
Meanwhile, women were spending on average 7.7 more hours a week than men on unpaid childcare, a “second shift” that is nearly the equivalent of a full-time job and risks forcing some out of paid work altogether, it found.
“Although jobs will return when economies bounce back, they will not necessarily be the same jobs,” said Larice Stielow, senior economist at PwC.
“If we don’t have policies in place to directly address the unequal burden of care, and to enable more women to enter jobs in growing sectors of the economy, women will return to fewer hours, lower-skilled, and lower paid jobs.”
The report, which looked at 33 countries in the Organisation for Economic Co-operation and Development (OECD) club of rich nations, said progress towards gender equality at work would not begin to recover until 2022.
Even then, the pace of progress would need to double if rich countries were to make up the losses by 2030, it said, calling on governments and businesses to improve access to growth sectors such as artificial intelligence and renewable energy.
Laura Hinton, chief people officer at PwC, said it was “paramount that gender pay gap reporting is prioritised, with targeted action plans put in place as businesses focus on building back better and fairer”.
Britain has required employers with more than 250 staff to submit gender pay gap figures every year since 2017 in a bid to reduce pay disparities, but last year it suspended the requirement due to the coronavirus pandemic.
(Reporting by Anuradha Nagaraj @AnuraNagaraj; Editing by Claire Cozens. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)
German January exports to UK fell 30% year-on-year as Brexit hit – Stats Office
BERLIN (Reuters) – German exports to the United Kingdom fell by 30% year-on-year in January “due to Brexit effects”, preliminary trade figures released by the Federal Statistics Office on Tuesday showed.
In 2020, German exports to the UK fell by 15.5% compared to 2019, recording the biggest year-on-year decline since the financial and economic crisis in 2009, when they fell by 17.0%, the Office said.
“Since 2016 – the year of the Brexit referendum – German exports to the UK have steadily declined,” the Office said in a statement.
In 2015 German exports to the UK amounted to 89.0 billion euros. In 2020, German they totalled 66.9 billion euros.
Imports to Germany from the UK totalled 34.7 billion euros in 2020, down 9.6 % compared to 2019.
(Reporting by Paul Carrel; Editing by Madeline Chambers)
German unemployment unexpectedly rises in February
BERLIN (Reuters) – German unemployment rose in February for the first time since last June, data showed on Tuesday, dashing expectations for a fall as lockdown measures to suppress the coronavirus case load held back Europe’s largest economy.
The Labour Office said the number of people out of work rose by 9,000 in seasonally adjusted terms to 2.752 million. A Reuters poll had forecast a fall of 13,000.
“Kurzarbeit (shortened working hours) continues to secure employment on a large scale and prevent unemployment,” Labour Office chief Detlef Scheele said in a statement, adding: “Individual sectors are feeling the effects of the lockdown.”
Germany has been in lockdown since November, and measures were tightened in mid-December, as it battles a second wave of the virus. Chancellor Angela Merkel has said new variants of COVID-19 risk a third wave of infections.
The unemployment rate remained unchanged compared with the previous month at 6.0%.
The labour agency said some 2.39 million employees were on shortened working hours in December under the government’s Kurzarbeit scheme designed to avoid mass layoffs during downturns by offering companies subsidies to keep workers on the payroll.
After peaking at some 6 million last April, the number of people on Kurzarbeit fell before rising again in November as lockdown measures kicked in, the Office said.
(Writing by Paul Carrel; Editing by Madeline Chambers)
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