BitShares-Based SEC-Compliant Tokens & Exchange

last month

As the fall equinox approaches we have a final summer bombshell - a 100% compliant exchange and a growing inventory of security, commodity and other types of tokens that pass SEC scrutiny, built on BitShares, which itself has been deemed a “clean coin” by the Tokens & Exchange Self-Regulating Body (TXSRB.org) -- and China as well!

The current BitShares exchanges will of course continue to exist and BitShares members can choose the exchange that suits their needs. The new exchange licensed by Stokens, Inc. and called the Stokens Exchange (Stokens.com), will require KYC/AML for membership and only list tokens deemed legal by the SEC and other related global regulating bodies where members reside.

John Gotts, the chairman and founder of Stokens and the TXSRB, engaged more than fifty ex-SEC attorneys, some of whom helped write much of the JOBS Act, Regulation A and other key security laws, to design the framework of the TXSRB and Stokens.com regarding compliance and licensing with funds and public offerings. The top attorneys on their team gave their take on his analysis of what the token industry needs to "clean up its act.” Here are a few takeaways from their conversation:

• Most ICOs were conducted illegally and now trade illegally. Foundations who try to comply and restart may have to pay fines and return funding.
• Stokens and the TXSRB provide the proper methods to create a self-regulating body and a legal site for private companies to raise money from accredited & non-accredited US investors, who may trade the digital representation of their investment (a token or tokens) legally.
• They expressed their opinion that Stokens and the TXSRB stand alone in the US and perhaps globally in their legal methods and plans and may get a seat in D.C. on the committee reviewing regulation on crypto investments for the United States Congress. They believe he’s designed the future for crypto investment and trading.

John came away feeling that of all the global exchanges perhaps only Coinbase would not be shut down if/when the SEC decides to act. He also learned what exchanges would have to do to “clean” the exchange operating in the USA:

• Delist tokens deemed unregistered securities.
• Don’t charge fees for trading without a broker/dealer license.
• Don’t charge fees for ICOs based on a percentage of what is raised, equity in the company or any success fee without a broker/dealer license or working as an agent for a broker/dealer.
• Don’t allow trading of security tokens without an SEC exchange license.
• Complete KYC/AML on all members for anti-money laundering.
• Provide auditable transparency – Each exchange must be audited.
• Provide educational material on a regular basis in a clear, visible place on any exchange or ICO website or related app explaining the risks of trading tokens and the possibilities of fraud and loss of funds.
• Provide clear guidelines to members on best practices for avoiding & reporting theft or fraud.
• Provide member wallets and trading with a technically secure exchange.

Embracing the TXSRB and SEC rules, regulations & laws will make the Stokens Exchange (powered by the BitShares Network) the first and most legally compliant way for a company to successfully secure funding without the chance of a shutdown, lawsuit or investigation. The Stokens Exchange is the future of crypto and it will be built on the BitShares blockchain.

BitShares was designed to support this from the beginning.

BitShares has always provided all the tools and utilities needed to allow users to comply with the regulations and laws that apply to them. These vary widely with token type and jurisdiction, so it must be the responsibility of the individual token issuers and exchanges that build on top of the BitShares platform to ensure that they are fully compliant. The necessary artificial intelligence does not exist for an unmanned blockchain to analyze whether every offering and user has complied with all the relevant rules and constraints.

But BitShares will enforce those rules, including constraining each and every asset to the rules on who can own them and what they can do with them. If you created a token and didn’t tell BitShares the right rules to enforce, you may have broken the law in some jurisdiction. Better check it out.

Since this is complicated and constantly changing, I applaud the efforts of Stokens.com and TXSRB.com to provide a turn-key exchange with the rules built-in for (eventually) every jurisdiction in the world. This brings a whole new level of comfort to those who want to do the right thing, but lack the resources to figure it out on their own.

Huffington Post Article
Protect Yourself from the Coming Crypto Crackdown

Cheers!

Stan Larimer, President
Cryptonomex
The Godfather of BitShares and the HERO


About the Author -- Stan Larimer

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This really, really, really needs to get translated into Chinese, Japanese and Korean and be sent to every media outlet in the East. Fantastic writing too, very succinct.

My God I can't believe investors/speculators aren't buying the shit out of BTS right now. Every other token/exchange is just trying to duck and cover, but Bitshares actually has a path forward. Literally 95% of altcoins are going to get shit hammered when the SEC and other goons start taking cryptos/ICOs etc. to task. The entire crypto market should be hedging by buying Bitshares and HERO. My God this could blow sky high

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really, why is BTS still rather going down, or do other not read those postings, sorry I hope you are right, but at this moment the shit did not get bought

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You are correct that it should be translated. Who will do it?

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This is awesome and could be the breakthrough for BitShares. What does it take to get this on https://www.cryptocoinsnews.com?

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Great to see Bitshares leading the way with this. I think we all know what is comming and it is nice to have someone guide us through all of the new regulation. Thanks for this info... very reassuring.

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Great results! Thanks for sharing

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🎩
😍😍
👕👍Great!
👖

No one gets me as excited as @stan does! Imagine me, a born rebel, being compliant. What a world we live in!

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@onceuponatime,
"Imagine me, a born rebel, being compliant" Ha ha ha that's funny, but you said the truth :D @stan is the person who contributed 100% on building BitShares to the next level! Actually I am surprised the effort he is putting on BitShares.
If BitShares made it's success, @stan is the key of that success! That's how I feel about his influence!

What should I tell about you! You said you are a born rebel, but what I feel is you are a "born noble rebel" :D

Cheers~

bitshares is like a football team... If you have tons of money, you buy a team (bitshares) and you start trading players (legalized tokens) supposedly at millions of value... So now when somebody (sec) asks where you found so much money you are not afraid to give them an answer... That's "football" my friends... Sorry >>> BITSHARES

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good

Hello @stan sir, I've been waiting for your post for days. You should write more often as your posts are very helpful. Thanks for another great post. It was very useful.

Steem on!

Boring stuff :)

But necessary. I liked this article better.

I am new to trading cryptos and currently use coinbase, gdax, bittrex and cryptopia. For someone that is not to tech savvy what does bitshares offer me that is different from these or how does bitshares work? @stan

Thanks for the info, Stan. TXSRB is a very wise move rather than letting government regulators move in and strangle the creative juice of blockchain and crypto out.

Great article, Stan.

This is very exciting and a great move forward for the industry :)

Sorry geography nerd here. We are approaching the fall equinox not solstice. Carry on...

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What we have planned will tip the earth 90% on it's axis.

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my compass is now pointing to BitShares anyway and lost sight of magnetic North 😄

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Always a critic out there :p

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Sorry, not trying to be critical but my life revolves around this kind of stuff. I couldn't help it :D

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Just playing with you, you are absolutely correct :)

awesome! can't say no to more customers :)

"of all the global exchanges perhaps only Coinbase would not be shut down if/when the SEC decides to act"

And how can the SEC presume global jurisdiction? How can John predict every country will bow down to the SEC's demands?

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Ever heard of FATCA? Ever wonder why every bank in the world pretty much pays attention to US regulations? You can expect the SEC to go to every monetary authority in the world (FINMA, Monetary Authority of Singapore, SEC of Hong Kong, etc.) and get them on board for the same rules. They already comply with all the KYC/AML rules for the most part, it is just extending the policies to Token Generating Events.

Now, those jurisdictions that don't fall in line will risk the same thing that happened to Switzerland to open up its banking system to FATCA (threaten huge fines on Swiss banks and threaten to pull their US licenses). Or if it is a smaller "offshore" jurisdiction it will be branded as money laundering, tax evasion, and then they will fall in line because the global financial system will avoid them if they don't.

Governments are going to embrace blockchain full swing for everything from currency to securities to derivatives to asset tracking. But the caveat is they will also tax everything and be very accurate because of the ability to track the transactions on the ledger! Get ready to fall in line with the regulations or get squashed, the days of cowboy trading in cryptocurrency are numbering near single digits now. Don't be a deer in the headlights!

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I'm aware of FATCA. It's my understanding SEC uses SWIFT as leverage over foreign banks, and threatens to restrict usage if not compliant.

Cryptocurrencies obviate the established monetary transfer system. Not to mention exchanges don't have to deal with banks to begin with. The only exchanges I could see getting targeted are those exchanging fiat currency to crypto.

Also, how could any government even think of moving on decentralized exchanges? Target the coders?

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Here I will give you an example of how governments work, and you can tell me if I am wrong. I will use the example of an infamous illegal substance which comes from a natural plant, which is banned throughout most of the modern world called cocaine.

  1. Alice sells Bob some cocaine for Bob's private use, Bob is not a dealer nor terrorist but just likes to use cocaine personally.
  2. Bob hides his cocaine stash.
  3. Law enforcement in Bob's home country suspect Bob has cocaine, and investigate Bob.
  4. Law enforcement go to judge and get warrant to search Bob's home.
  5. Bob's stash of cocaine is found by law enforcement.
  6. Bob is charged with dealing in cocaine, money laundering, just because the prosecutor thinks he can get all those charges to stick because Bob had a lot of cocaine.
  7. Bob loses him home, savings, all assets through civil asset forfeiture.
  8. Bob goes to jail after losing his trial.

In China there is a a famous idiom "Kill the chicken to scare the monkey", which is what governments do all the time with selective enforcement.

Replace the word "cocaine" with "token which is a security" in the above example, and you have exactly what will happen to a select few once regulatory frameworks are put into place. Some will get away, some will be fined, some will lose everything and go to jail. Funding drugs, crime, terrorism and money laundering will be the chants repeated by regulators, whether true or not. This playbook has been used since the beginning of organized society, "for the children" and "we need to protect you from yourself".

In reality there are lobbyists with big dollars headed to regulator revolving doors to get this unregulated space under regulation and on a global scale. Don't believe me? Why is opium illegal yet pharmaceutical opioid abuse is a major problem in America? Big pharma lobbyists or "for the children", you tell me.

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I couldn't have said it better. In any case, Anarchy is not ideal.

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I agree with what you're saying in how the US government can and will use intimidation and will act on, or coerce other governments to act on foreign companies and individuals. However, if even one jurisdiction refuses SEC demands, which is increasingly likely as BRICS nations pivot from SWIFT, and allows an unregulated exchange, what now? WikiLeaks is still kicking and Julian Assange isn't in jail (supposedly), and we all know to what ends the US has gone to plug those leaks.

My other point also remains, how can a government, or coalition of governments take on a decentralized system without it being an exercise in futility?

The proverbial monkeys are still torrenting en masse, despite the killing of and threats to kill more proverbial chickens. Given .gov success at taking down torrent sites, ahem ThePirateBay, and prevention of peer to peer file sharing, what success will they have at taking down decentralized cryptocurrency exchanges?

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Your comparison to Torrents is interesting. But keep in mind Torrents only threaten the existing model of selling content that the entertainment industry enjoys. Torrent use does not threaten the very thing that gives governments power, which is the monopoly they have in the issuance of FIAT. Do you really think they will sit this one out on the sidelines?

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I don't think they'll sit back, I just don't see how they can successfully reign in cryptocurrency exchange regulation.

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We may be able to change their policy by affecting public opinion throw educating campaigns , espicially as we have stable tokens (like bitusd ) that cant be a bubble
We also can buy policies by supporting politicians who are pro innovation

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Right. These lawmen don't have jurisdiction and even if they imagined they did, their power is illegitimate. It's nice that BTS offer tools for people who want to comply, but that is honestly the LAST thing I want to see from a crypto and would likely sell if off if given the chance to vote against eternal war and endless boots stomping on human faces.

@stan great post! We are scheduling our token launch on Bitshares for next month!

I feel that we have made the right choice of platform with Bitshares, and we are all looking forward to some good, clean, self-regulated fun!

Thanks for the input Stan. Stokens and TSXRB are headed in the right direction. The regulatory wave is about to hit and when it does it is going to catch a lot of folks like deer in headlights.

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deer in headlights.png

hi @stan, you are real Godfather of Bitshares & Real hero of steemians. your all the posts are very helpful for us, me a big fan of you bcoz your style of working and concentration and new ideas are guideline of every steem members and every should b thankful to you for your worth giving knowledge. thanx a lot sir.
Resteeem

Good post and I wish steemit had a sticky or pin option because this is one of those Exclusive posts.

Great and Interesting news @stan, this will be huge for BitShares.

Made another post yesterday regarding BitShares:

https://steemit.com/steemit/@oudekaas/paradigm-shift-from-bitcoin-to-bitshares

amigo #resteemia at your service

interesting update & impressive work @stan

ReSteemia
'UpVoted ReSteemed Commented'

Its an excellent piece of blog indeed and very very valuable a and great info about bitshares and helpful for those who have got Bitshares.

Thank you so much.

This removes a lot of apprehension from potential users!

Chachi guay! 😎

Going to get this on twitter too.

Great stuff, @stan!

I have quite a bit of money in Bitshares and love what you guys are doing! I see you mention $330 as a goal price for Bitshares quite often. Can you give some timeframes on when you think we might achieve that, please? Are we talking beyond 2018? And what can we expect in 2018?

Thanks!

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This Summer. :)

(I have extended This Summer with the following definition: till BTS reaches $330)

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Okay, let me rephrase, then: what's the timeframe on "this summer?" ;)

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Ok i am a long term holder of bitshares and i invest 90% of my money in it, yet i doubt we could reach 330 $ any time soon - that more than 6 times of all crypto market cap of all coins - hope there will be big projects coming soon
Anyway good luck

This is some exciting news, look forward to seeing the platform (and crypto in general) grow in utility and acceptance...

Highly rEsteemed! Thank you for pointing out the innovation here.
Very impressed with Bitshares capabilities.
SteemON!

Imgur

Congratulations for article, very good

So the new exchange will be on the same blockchain and same tokens , the only difference is it will have legally complaint tokens that will not be issued on bitshares
Am i right?

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No, it will only provide access to the subset of tokens and users that are compliant with regulations. Nothing that doesn't pass TXSRB rules will be available there. Think of it as a filter on BitShares that supports only qualified assets and users as defined by the country where the exchange is hosted. Doesn't affect the underlying blockchain. The supported users/tokens may vary with home country where each Stokens Exchange franchise is hosted.

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This will really take the fear of regulations out of the picture. It is difficult to invest when they are "moving the goalpost as we play ", so to speak. I've always believed in Bitshares and have often compared it to owning the shovels during the goldrush. I think Bitshares serves multi purposes which should only make it more valuable as time goes by.

@stan, this paper gives new knowledge to me. Thank you friend.

This is exciting. I am glad to see self-regulation instead of government regulation. How many of these tokens can we actually get past a test (with a little work). I love the clean list of tokens. As on intermediate step, it would be nice to have a list of good tokens verses bad tokens. That is a list of people who appear to honestly be building real value verses con artists trying to rip people off. This could help clean up crypto -immediately- and try to work as a stop gap measure until regulation catches up.

edit found info

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