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At a recent conference we attended, one of the better speakers quipped “artificial intelligence is neither artificial, nor intelligent.”  As to the latter point, Axiom disagrees.  They hope to use AI to issue spot compliance issues surrounding the forthcoming EU Data privacy regulation, known as the GDPR, in existing contracts.  The Global Data Protection Regulation or “GDPR” is an EU data privacy regulation set to go into effect on May 28, 2018.  The regulation applies to US companies doing business with EU entities or in Europe, and it has teeth: fines can reach 4% of revenue or $20 million for the worst violations.

Singapore Gets Specific

There are almost no statutes or regulations anywhere in the world addressing Initial Coin Offerings or (“ICOs”).  They are a new phenomenon, and regulators who, one year ago, had no idea what a blockchain even was are playing catch-up.

Stated briefly, ICOs are public offerings of cryptocurrency tokens in exchange for established cryptocurrencies like Bitcoin or Ethereum.  They are, primarily, a means of funding new projects that rely on distributed ledger technology or the “blockchain.”  Funding for some ICOs has reached into the hundreds of millions of dollars, even though many offerings were supported only by a brief description of the business idea (a “whitepaper”) and a description of the funding team.  There is justifiable concern among regulators that many of these ICOs may be fraudulent, and cautionary tales already are emerging.

There are two standard responses thus far: an outright ban (see China and South Korea), and more equivocal statements about what might be a security and whether current laws might apply to these token offerings.  Very rarely does the regulator delve into specifics.  But Singapore has done just that with its recent guidance.  The guidance examines a series of case studies, and concludes much as one would expect–transparent securities offerings are regulated whereas tokens with use-cases as commodities on an actual distributed ledger are not.  That is, if you can use the tokens or spend them on the platform, it is less likely they are securities.

Whether the United States ultimately adopts this approach remains to be seen.  The new Chairman of the SEC, Jay Clayton, has said that he has yet to see an ICO that did not have the “indicia” of a security.  This should concern many recent offerors.

In Other News . . .

Bitfinex might be the new Mt. Gox . . .

Pricing Bitcoin is apparently hard. . . and

In privacy, Microsoft has unveiled its new cloud-based GDPR compliance tool.

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