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Saturday, August 18, 2018
Token Regulation and TWEX
Data & Research

Token Regulation and TWEX

Why does the SEC want to regulate tokens?

The mere fact of raising money to run a business and creating a hope of profit either directly or indirectly via the sale of the tokens at the market value classifies a token as a security token irrespective of what promoters might say and state.

This is the base of incoming regulations by the SEC! This simple regulatory act means that almost all tokens will have to present documents as if they were conducting an IPO (risk factors, disclaimers, audits, compliance, KYC, AML, etc…).

Needless to say that 95 % of all tokens out there will fail and 99 % of new ICOs will not see the light of day. This regulatory move will also satisfy other legal parameters that they (SEC and US Govt) were finding hard to deal with:-

  • The fact of whether a token is a currency or not
  • Taxation
  • Protection of the SEC and the government from investor claims because of losses incurred while speculating (yes some investor’s gamble their money away, loses and then try to find a culprit to blame!)

With a single stroke, almost all of their problems are resolved (SEC & US Government). By the way, what do you think will other regulatory bodies around the world then do?

How does TWEX Adhere to the Financial Regulations of World’s Top Economies?

United States

The U.S. economy remains the largest in the world in terms of nominal GDP. The $19.42 trillion U.S. economy is 25% of the gross world product. The United States is an economic superpower that is highly advanced in terms of technology and infrastructure and has abundant natural resources. The nominal GDP for the U.S for the year 2022 is estimated at $23.76 trillion, while the GDP in terms of PPP is projected at $23.76 trillion for the U.S.

In the United States under the Securities Act of 1933, any offer to sell securities must either be registered with the United States Securities and Exchange Commission (SEC) or meet certain qualifications to exempt them from such registration.

The SEC’s recent intent to rule a majority of tokens as security has managed to clear up some of the grey areas regarding tokens. In some cases, the token is simply a utility token, meaning it gives the owner access to a specific protocol or network; thus it may not be classified as a financial security. On the other hand, if the token is an equity token, meaning that it’s only purpose is to appreciate in value, then it looks a lot more like a security.

TWEX Ltd. has thus, newly introduced a unique creation called the TWEX Tokenized Preferred Shares which are similar to preferred shares only difference is we are registering it on the block-chain with its inherent payment structure. TPS enables companies doing an ICO to satisfy oncoming regulations and still be able to continue to trade if and when their token has ceased to exist.

India

India is the sixth largest economy in the world with a nominal GDP of $2.45 trillion. The country ranks third in GDP in terms of purchasing power parity at $9.49 trillion. The country’s high population drags its nominal GDP per capita down to $1,850. India’s GDP is still highly dependent on agriculture (17%), compared to western countries.

The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India. It was established in the year 1988 and given statutory powers on 30 January 1992 through the SEBI Act, 1992.

As Crypto-assets have not been legalized by SEBI, TWEX Ltd. issues its unique creation- TWEX Tokenized Preferred Shares to Indian investors as they cannot invest in Tokens. A separate mechanism has been incorporated for India investors called the TWIN Tokenized Preferred Shares that enable investors to invest in Indian companies and thus gain profit based on TWEX LTD’s Profit Generation mechanism.

China

China has transformed itself from a centrally-planned closed economy in the 1970s to a manufacturing and exporting hub over the years. Since it initiated market reforms in 1978, the Asian giant has achieved economic growth averaging 10% annually (though it’s slowed recently) and, in the process, lifted almost half of its 1.3 billion populations out of poverty and become the undisputed second-largest economy on Earth. The nominal GDP for China for the year 2022 is estimated at $17.71 trillion respectively, while the GDP in terms of PPP is projected at $34.31 trillion for China.

The China Securities Regulatory Commission (CSRC) is an institution of the State Council of the People’s Republic of China (PRC), with ministry-level rank. It is the main regulator of the securities industry in China. China has taken a string of steps in recent months to clamp down on the crypto-currency market, including closing exchanges and banning so-called initial coin offerings (ICOs) – digital, token-based fundraising rounds.

Similar to the United States, TWEX Ltd. offers Chinese investors to invest in TWEX TPS registered on Blockchain. The Preferred Shares will thus give these Chinese investors, like any preferred shareholder, the right to receive profits from the TWEX Platform.

Japan

Japan’s economy currently ranks third in terms of nominal GDP, while it slips to the fourth spot when comparing the GDP by purchasing power parity. The nominal GDP of Japan is $4.84 trillion, its GDP (PPP) is $5.42 trillion, and its GDP (PPP) per capita is $42,860.

The Financial Services Agency (FSA) is a Japanese government agency and an integrated financial regulator responsible for overseeing banking, securities and exchange, and insurance sectors in order to ensure the stability of the financial system of Japan. Japan is moving towards legalizing initial coin offerings, even as countries such as China and the U.S. restrict the fundraising technique because of their risks for investors.

Proposed guidelines include identifying investors to prevent money laundering, protecting existing shareholders and debt holders, restricting unfair trade practices like insider trading and ramping up cybersecurity efforts. TWEX Ltd. has formulated a strict AML and KYC Policy to prevent any unfair trade practices.

United Kingdom

The United Kingdom, with a $2.5 trillion GDP, is currently the world’s fifth largest. Its GDP in terms of PPP is slightly higher at $2.91 trillion while its GDP (PPP) per capita is $44,001.

The Financial Conduct Authority (FCA) regulates the financial services industry in the UK. Its role includes protecting consumers, keeping the industry stable, and promoting healthy competition between financial service providers.

The FCA recent document on cryptocurrency outlines that companies providing cryptocurrency derivatives need to be authorized financial services providers. The FCA is not regulating cryptos if they are not part of other regulated products or services. Companies that are conducting regulated activities in cryptocurrency derivatives must be in compliance with all applicable rules in the FCA’s Handbook and any relevant EU regulations.

TWEX Ltd. has taken steps to comply with these regulations as well. With a strict KYC Policy and Anti Money Laundering Policy, TWEX Ltd. keeps its platform free from any unfair trade practices. It has also taken steps to comply with FCA & EU Regulations.

The European Union

The European Union (EU) is a political and economic union of 28 member states that are located primarily in Europe. EU policies aim to ensure the free movement of people, goods, services, and capital within the internal market, enact legislation in justice and home affairs and maintain common policies on trade.

The European Securities and Markets Authority (ESMA) has strengthened requirements for Contracts for Differences (CFDs) in crypto-currencies, as stated in an announcement on March 27. EU regulators have concerns about the “risks” associated with investing in cryptocurrencies, emphasizing lack of protection and understanding, money loss, and problems with unregulated financial activities.

TWEX LTD. solves the ESMA concerns by creating a transparent mechanism informing all investors about the risk factors related to each company listed on the platform.

France

France, the most visited country in the world, is now the seventh largest economies with a nominal GDP of $2.42 trillion. Its GDP in terms of purchasing power parity is around $2.83 trillion. France has a low poverty rate and high standard of living, which is reflected in its GDP (PPP) per capita of $43,652.

The Autorité des marchés financiers (AMF) is the stock market regulator in France. The AMF is an independent public body that is responsible for safeguarding investments in financial instruments and in all other savings and investment as well as maintaining orderly financial markets.

The French market regulator has concluded that the regulations on the marketing of financial instruments in France apply to cryptocurrency derivatives. The French ministry of finance announced their intention to create a crypto- friendly environment, especially in terms of ICOs by creating an optional regulatory framework.

The AMF recognizes Utility Tokens that give the holder the right to use the technology and/or services distributed by the ICO promoter. TWEX Tokens are classified as Utility Tokens that should thus be recognized by the AMF according to their criteria.

Italy

Italy’s $1.81 trillion economy is the world’s ninth largest in terms of nominal GDP. Italy is among the prominent economies of the Eurozone, but it has been impacted by the debt crisis in the region. The GDP measured in purchasing power parity for the economy is estimated at $2.3 trillion, while its per capita GDP (PPP) is $37,905.

Commissione Nazionale per le Società e la Borsa (CONSOB) is the government authority of Italy responsible for regulating the Italian securities market. This includes the regulation of the Italian stock exchange, the Borsa Italiana.

Cryptocurrency will be referred to as virtual currency in the country, and it will be used as a means of exchange for standard goods and services. It is worth noting that cryptocurrency is not issued by the Central Bank, it has no reference to the rate of other traditional currencies, and therefore it need not be regarded as a means of payment. Italian authorities are confident that cryptocurrency is a number one instrument among those used to finance terrorism and for money laundering. And, accordingly, this set of rules was developed to remedy this situation.

Italian investors can thus invest on the TWEX Platform after thoroughly reading our policy to tackle with Money Laundering and strict procedure on how we scrutinize the source of our investor’s funds through our KYC Policy.

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Syed Ali Mudassar
It was when he was pursuing his graduation in Computer Science that he found his flair for writing about new and existing technologies. He likes researching about technologies and how they could help people. Currently, he works as the Content Manager at CoinFrenzy, a leading blockchain news, and media publication website.