Rytikov Aleksander

Rytikov Aleksander

Wednesday, 21 November 2018 17:55

INSTITUTIONALIZATION OF CRYPTOASSETS: KPMG

Cryptoassets have arrived, but what will it take to secure their future? Institutionalization, says KPMG report from 15 November 2018.

Key challenges remain including cyber security, regulatory compliance, fork management and accounting.

The future success of cryptoassets will depend on the ability to institutionalize them by building trust and facilitating scale, with participation from both traditional and emerging players within the global financial services ecosystem, says a new report, Institutionalization of Cryptoassets from KPMG, with contributions from Coinbase and other industry companies.

The report points out that recently there has been a wave of new entrants in the market, such as established financial services institutions, security token platforms and crypto exchanges, who are launching various crypto products and services for the emerging blockchain-based tokenized economy. It suggests the tokenized economy will likely be one of the more significant innovations enabled by crypto.

Authors of the paper also suggest that crypto represents an opportunity to potentially transform the financial services sector and create a truly open global financial system.

The report takes an in-depth look at some of the key challenges facing crypto including:

- compliance with regulatory obligations;

- know your customer (KYC) and asset provenance;

- securing cryptoassets;

- accounting and financial reporting;

- tax implications;

- fork management and governance.

The report says of the 2,000 plus cryptoassets issued or mined, many, including those with high valuations, don't have a functional product associated with them.

Is crypto a solution looking for a problem? No, there are real problems that cryptoassets are looking to address and their staying power will be defined by their ability to reduce friction and inefficiencies that currently exist within the global economy.

Read the report...

Source: KPMG International.

The Securities and Exchange Commission’s Enforcement Division issued the annual report of its ongoing efforts to protect investors and market integrity, Nov. 2, 2018. The report also highlights several significant actions and initiatives that took place in FY 2018.  The report presents the activities of the Division from both a qualitative and quantitative perspective.

In accordance with Chairman Clayton’s charge to focus on Main Street investors, Division of Enforcement Co-Directors Stephanie Avakian and Steven Peikin previously outlined five core principles that serve to guide the work of the division.

The core principles – focus on the Main Street investor, focus on individual accountability, keep pace with technological change, impose remedies that most effectively further enforcement goals, and constantly assess the allocation of resources – were first described in the Division’s FY 2017 annual report.  The Division’s adherence to these principles resulted in meaningful results, including the return of almost $800 million to harmed investors, holding individuals – including many at the highest level – accountable, barring bad actors from the securities markets, and sending strong messages of deterrence.  The impact of these actions has unquestionably protected investors of all types, particularly retail investors.

The Division’s focus on obtaining relief for harmed investors is underscored by various retail investor-specific initiatives.  One example is the Division’s Share Class Selection Disclosure Initiative, a self-reporting initiative designed to quickly return money to investors who may have been harmed by failures to disclose conflicts of interests related to the selection of mutual fund share classes.

Also illustrative of the Division’s impact in protecting investors and market integrity is the groundbreaking approach to addressing misconduct involving initial coin offerings and digital assets, which reflects a focus on cases that deliver strong and clear messages and have broad market impact.

Quantitatively, the SEC brought a diverse mix of 821 enforcement actions, including 490 standalone actions, and returned $794 million to harmed investors.  A significant number of the SEC’s standalone cases concerned investment advisory issues, securities offerings, and issuer reporting/accounting and auditing, collectively comprising approximately 63 percent of the overall number of standalone actions.  The SEC also continued to bring actions relating to market manipulation, insider trading, and broker-dealer misconduct, with each comprising approximately 10 percent of the overall number of standalone actions, as well as other areas.  And it obtained judgments and orders totaling more than $3.945 billion in disgorgement and penalties...

Source:  SEC.gov

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