Page 5 - February 2018 Disruption Report Flip Book

CRYPTOCURRENCY
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of the Howey test—that it involves “an investment of money. And a common enterprise. With the expectation of profit, primarily from the efforts of others”—then the token falls under the classification of “utility token.” These tokens, often called app coins or app tokens, provide access to a product or service. Since the SEC has not given official guidance on utility tokens, the industry is uncertain if it falls under SEC regulations.
Bitcoin technology delivers structural change to the capital market—Real Time Settlement, a key building block of the Blockchain Economy. On Daily Fintech, Bernanrd Lunn wrote:
Real Time Settlement impacts all Assets, both traditional financial assets (equities, bonds, currencies, commodities) as well as the opening up of non- traditional assets for greater traceability, tradeability and liquidity. As software is eating the world and The Blockchain Economy needs to be funded, the most critical asset today is equity, specifically the early stage equity that is lining up at the gates of Equity Token platforms.
In December, there was big crypto news from three exchanges:
• Australian Stock Exchange moving their Settlement System to Blockchain
• Lykke Token Sale on 12th December
• tZERO Token Sale on 18th December
“Santa is a ahead of schedule this year, with Real Time Settlement news from all the above tucked in his sack,” wrote Lunn. “...Before that we describe why Real Time Settlement is so important by telling the story of the Ferrari and the Donkey. Trading and Settlement is the story of the Ferrari and the Donkey.
We measure trading in fractions of a second. That is the Ferrari. Then we climb out of that speed machine and get onto the old grey donkey to do settlement, which takes 2 or 3 days (T+2/3 Securities Settlement).
All of that changes when we move to Real Time Settlement or to be more technically accurate— Concurrent Delivery Versus Payment (DVP).”
There are four reasons why real time settlement changes trading and disrupts Wall Street:
• Whole categories of companies that do post trade processing and all the associated processes and costs—such as Depository Trust & Clearing Corporation, National Securities Clearing Corporation, and Regional Interface Organization (RIO)—will no longer be needed.
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