on 15th March, Bloomberg BNA reported that Stephanie Avakian (Enforcement Division Co-Director) of US SEC (Securities and Exchange Commission) has confirmed that “dozens” of investigations have been conducted by the agency in the cryptocurrency space.
It was reported in February that subpoenas have been sent by SEC to companies, that are suspected of having trouble with the security laws through their contribution in the ICOs (Initial Coin Offerings). The comment of Avakain follows these press reports as she said;
“We are very active, and I would just expect to see more and more.”
Statement Released by Securities and Exchanges Commission (SEC)
A statement was released by SEC on 7th March, prompting cryptocurrency trading platforms that they are under the control of the SEC as it monitors them and as an outcome, it must register as exchanges. It’s already clear that SEC holds the main responsibility for proposing securities rules, enforcing federal securities laws, regulating the securities industry, and other actions, which includes the electronic securities markets. SEC supervision ended up as three different companies were suspended from trading due to queries related to the cryptocurrency.
What has SEC done against the crypto-related companies?
Over the past few years, the SEC has taken more steps against cryptocurrency companies that it was seeing as flaunting securities laws. Bloomberg also reported that since September 2017, many actions have been taken by the commission against companies.
On 14th March, Mike Lempres (Chief Legal and Risk Officer at Coinbase) has highlighted in a testimony (before Congress) that the major financial regulatory organizations haven’t agreed on the nature of cryptocurrency. In the US, the regulatory framework for cryptocurrencies still remains unclear.
For SEC, it is a security, while the CFTC (Commodity Futures Trading Commission) deliberates tokens as a commodity. If we talk about the IRS (Internal Revenue Service), it considers tokens to be property, while tokens are considered as currency for FinCEN (Financial Crimes Enforcement Network).
When I do shopping, I like to buy goods at a low rate and save some amount. This is much difficult to attain profit while you are buying or selling something. In the same way, when you are using bitcoin ATM in exchange as well as in buying of goods. You can make bitcoin profit… not serious??? Yes, you can make the profit while you are using bitcoin ATM.
Bitcoin ATM industry is few year old but is growing every day. It’s almost more than 500 ATM worldwide. Basically, profit from bitcoin is not easy money. You need some targets for your success. Firstly, make it sure that you are making transactions in legal manners with a required license. Secondly, it is very important to choose the public place. Third, you need some promotion of your machine to your surroundings. Fourth, you have to maintain bank relation for the back end. Five and the most important is to make a good reputation.
Furthermore, ATM charge 5.2 % fee or 6% assume $2k gross profit per location on average. This fee can be varying from place to place. Here is an example of $20k per year means $100 gross profit, which is nothing. On the other hand, in a case of Robocoin, an operator will pay $1 fee. According to Robocoin statistics, 1/3 of all sell bitcoin transactions. Whereas, 2/3 buy operation on average. It is assumed that buy and sell transactions are on an equal scale, but it varies. Actually, not all bitcoin ATMs operation support these two-way transactions. Sometimes there is only buy operation and average buy and sell is $480 and $750. Ironically, operation matrices highly depend on many factors including place, area, country, traffic etc.
Here, we created 3 scenarios for bitcoin ATM by using the calculator. Basically, these are theoretical calculations, which do not need any promotions and marketing process.
Is bitcoin mining profitable?
Scenario no. 1
Skyhook is only one-way transaction operator and the bill acceptor is limited to a capacity of 500 bills. Which makes it the cheapest ATM. On the other hand, it is with limited in operations like does not accept large Euro banknotes. The most important things in place, you have to choose the right place.
For example, cash logics are done by the operator and we don’t have to pay rent. Average transactions are 100 per month and average transaction of $50. After the period of payback of bitcoin ATM which is 4 month, it will bring $235 to the owner every month after the return of investment.
Scenario no. 2
This scenario includes more than two bitcoin ATM machines. Most of them support two-way transactions process and much solid than the scenario 1. For example, ATM cost is $6000 and per year transactions are 100 which average transaction is at $150. Calculations show that after 9 months of launching it will reach to its break-even period. Whereas it brings $705 per month to its owner after investment return.
Scenario no. 3
Robocoin ATMs, the most expensive ATM in the market. These ATMs are fully equipped and also support two-way transactions. ATM cost is $15000 with 150 transactions per month and average transaction size is $300 per month. Because of its function, it also looks like the standard bank if ATM.
Here is some example of different ATMs we find on the internet. Vancouver first Robocoin machine, Bit Access stats, Black Star Pastry Bitcoin ATM, Skyhook Bitcoin ATM in the Philippines, Satoshi points Bitcoin ATM in Bristol, Operators survey, BTCPoint analysis, Two-way BitXatm machines in Switzerland.
If you are going to purchase bitcoin machine don’t expect too much. Make your relations strong and promote your machine. Above are some example and will support you to make your decision profitable.
After being spooked by the massive digital tokens crackdown, cryptocurrencies got another pushback by the feds recently. The Securities and Exchange Commission in the U.S has decided to gun down all the cryptocurrencies, especially Ethereum under regulatory scrutiny to whether consider it as security or commodity. After a remarked high range in digital currency world, this bull to bearish reversal is the result of investor anxiety gushes over the squabble between Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC).
The second most popular digital currency after Bitcoin in the charts, Ethereum is considered under the category of security will have hard consequences. Not only for Ethereum cryptocurrency, but all digital currencies crowdfunded through ICOs, that is Initial Coin Offerings.
Coming under increased regulatory scrutiny by the U.S government, all these cryptocurrencies are viewed as securities due to their speculative nature all around. Regulators have already declared bitcoin as security. But undermining the liquidity of this second popular cryptocurrency can prove out to be disastrous for it and also the cryptocurrency economy. Though the basic mechanism working behind these two digital currencies is not merely same, but they contribute majorly to the cryptocurrency world.
Initial coin offering
Until the mid-2017, selling transaction of these tokens was not much of an exhausting task. A team would emerge through these blockchains and present their purpose of tokens in a ‘white paper’. They would then arrange an Initial Coin Offering Service, ICOs where they would offer coins to nearly anyone who would exchange them for cash or Bitcoins.
The main idea or theory behind this ICO was to fund and support the construction of that newly emerging online service. But later in a few cases, these ICOs were proved to be scams. Absconding of these organizers created an upthrust, where SEC fired a warning claiming that tokens sold in ICO may be considered as securities and their declaration will be mandatory. SEC values Ethereum similar to any public Company who strives every act to value their stock.
Now the developers are concerned that due to the fact that Ethereum ICOs investors bought the tokens in hope that their value will increase in the near future, it could be classed as security. But the plethora of issues is not that straight and easy here.
Ethereum co-founder denies
The whole dilemma was observed and addressed by the co-founder of Ethereum, Joseph Lubin in a conference. He says that the scrutiny doesn’t upset him. According to him and the developers, this does not meet the requirements of security and doesn’t have to be regulated, therefore. There were no concerns about the potential issues about the cryptocurrency. he further said, he never considered and identified the system as security ever.
The Howey Test
A case resided between the SEC and WJ Howey Co in 1946. In this case, the foundation to determine the event to be a commodity or a security was set. It is now known as the Howey Test.
In simpler terms, Howey Co. sold a part of their citrus farm to some investors. Their idea behind it was to gain profits from the operations performed on the farm. It was considered as a securities contract by the judge explaining that the scheme focuses on the idea to obtain profits from the efforts and labor of others.
Basically, in simpler terms, this test helps to determine if a transaction or profit is obtained solely by the hard work and labor of one party and not by the other party, combined in an agreement. This Howey Test has been greatly talked and argued about in the regard of these cryptocurrencies and ICO. As the basic phenomena in Ethereum ICOs reside the same. The investor expects profits primarily from others hard work and efforts.
Securities classification arguments
According to wall street journals, the future of the cryptocurrencies is under debate, whether it would be identified as security or not. Commodities and securities under which the legislation falls are regulated by different authority bodies. They are regulated and operated in different markets and agencies. These differences will greatly affect the investors, sellers, and buyers in the cryptocurrency market.
Despite all the fuss and controversy about the issue, a lot of experts are very positive and hopeful about the future and growth of Ethereum cryptocurrencies. Many have come up suggesting that Ethereum and such cryptocurrencies may be considered as unregistered securities after a continues refusal by the founders of them being never entertained as security. The growing market capitalization of Ethereum cryptocurrency has shown that this is not going anywhere this soon!