The Securities and Exchange Commission (SEC) headquarters building stands in Washington, D.C.

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Cryptocurrency was invented by people who didnt much like regulators, but red tape can still bind the technology that enables it, blockchains. Fresh proof comes from a pronouncement from the Securities and Exchange Commission late Tuesday. It said that regulations applying to investments such as stocks also apply to some initial coin offerings, a novel approach to fundraising that startups have used to draw in more than $1 billion this year.

Described simply, an ICO sounds like a childish money making scheme. A person, project, or company in need of capital creates a new kind of digital coin and sells a tranche of them for real money. Magic! The coins are created using the same kind of technology behind cryptocurrencies such as Bitcoin or Ethereum, and usually paid for using digital currency, not dollars.

ICO boosters describe them as a democratizing financial force that provides capital to projects unlikely to get it from established sources such as banks or venture capitalists. The SECs announcement means that some projects will now have to pay up for the lawyers, disclosures, and paperwork required to register with the SEC before they can solicit money from Americans.

That news was widely expected, but could cool a fever that even proponents of ICOs say risks leading people to stake money on poorly planned, or even outright fraudulent projects. You had a mix of serious teams with good developers and track records and then a bunch of entrants looking for a get rich quick scheme, says Christian Catalini, an MIT professor who has been studying ICOs, and considers them a valuable financial innovation. I think the SEC is worried that many people dont realize its like gambling; many or most of ICOs will go to zero.

So why would you buy into one of these schemes? Often because the brand new coin, or token, youre offered today is supposed to have some kind of utility or value tomorrow.

In May, browser company Brave raised $35 million in less than 30 seconds by selling one billion units of what it calls Basic Attention Tokens, for example. The tokens are intended to be used inside a new market for monetizing online publishing and advertising. Buying in early might give you a chance to shape that market and get better deals on ads than you could by joining up once it takes off. Another reason ICOs have proved popular is that you can usually trade the tokens you just bought right away with other people, offering liquidity you dont usually get when backing early stage startups.

If youre thinking all that sounds similar to how companies already sell shares or other tradeable things to investors, youre thinking like the SEC. An Investor Bulletin issued late Tuesday warned that while ICOs may provide fair and lawful investment opportunities, they can also be used improperly to entice investors with the promise of high returns in a new investment space. To avoid that downside, the SEC says that from now on some ICOs will have to meet the same standards applied to non-crypto securities such as stock offerings. That means registering with the SEC and disclosing information about the investment vehicle and its risks. The policy announcement was prompted by an investigation of Ethereum-based investment scheme The Dao, which attracted $150 million-worth of funding and then saw a third of it stolen by a hacker who exploited sloppy coding.

The new guidance was expected. But its arrival, and the fact that the SEC didnt lay out exact criteria for what would make an ICO a security (or not), makes the business of launching a new ICO in the U.S. more complicated. Wannabe token issuers now face the task of figuring out if their scheme falls under existing securities laws. If it does, theyll have to go to the trouble of registering it with the SEC. Bruce Fenton, founder of blockchain-focused investment advisors Atlantic Financial, says that the legal and administrative fees to do that can cost anywhere from $20,000 to the millions of dollars for more complex operations.

The extra friction will probably slow the pace of new ICOs. Startups raised more than $1.2 billion with ICOs in the first half of 2017, according to financial research company Autonomous. Catalini of MIT thinks a deceleration would not be a bad thing, because recent excitement about ICOs has created a situation where teams with not much of a product, plan, or technology can rapidly raise millions.

Even the valuations of the credible ones are astronomical for an early stage startup, Catalini says. The SEC doesnt want people to put their savings into this who cannot afford to lose them. He believes the frenzy has been stoked by millions flowing into ICOs from people who lucked out and got into Bitcoin and Ethereum early, giving them a lot of unexpected capital to play with.

What next for ICOs? They arent going away, but they may become more select. Catalini guesses that the evolution will be similar to that seen with equity crowdfunding, where startups solicit money in small chunks from many people. The SEC moved to allow that in 2015, triggering excitement about a radical new grassroots funding model for companies. In reality, Catalini says his research indicates crowdfunding that targets accredited investorsa status that requires a net worth of $1 million or a hefty incomehas been much more significant. Targeting only accredited investors can help you avoid having to register your security with the SEC.

Many people in the cryptocurrency world see yesterdays news from the SEC as legitimizing, not constraining. After all, recognition by the SEC might draw in more investors previously unsure about ICOs. Coin Center, a Washington, DC, nonprofit that advocates for cryptocurrencies, says the decision matches up with a regulatory framework it proposed two years ago. It also notes that what the SEC has said leaves plenty of latitude for ICOs to avoid it being categorized as a security. Restricting who can invest is one way; non-profit projects can get also exemptions.

Fenton says any dip in ICO activity caused by the SECs announcement wont much alter the overall trajectory of ICOs. The number of ICOs is likely to grow almost regardless of what roadblocks may slightly slow it down, he says. Overall the space will grow fast, including the market of tokens that are registered securities. Evidence cryptocurrencies will radically disrupt the financial system as some have hoped is still lacking, but they are managing to survive within it.

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Regulators Warn Cryptocurrency Startup Fundraisers to Play By the Rules - WIRED

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AMD released itsquarterly earnings after the bell Tuesday and the stock took off.

A beat on earnings and revenue, coupled with a higher than expected forecast for the rest of the year, sent AMD's stock up about 8%.

In the earnings call following the company's release, Lisa Su, CEO of AMD, said something surprising.

"Relative to cryptocurrency, we have seen some elevated demand," Su said. "But it's important to say we didn't have cryptocurrency in our forecast, and we're not looking at it as a long-term growth driver. But we'll certainly continue to watch the developments around the blockchain technologies as they go forward."

Su said that despite a boost in graphics processing unit sales due to increased demand from cryptocurrency miners, the company wouldn't focus on the exploding market.

Cryptocurrencies like bitcoin and Ethereum have grown by headline-setting margins this year. Miners are those who lend their often specially-built computers to the cryptocurrency networks to help with complex computing required to verify payments on the platforms. Miners have been buying up lots of GPUs recently in an attempt to make their computers faster and grab a larger portion of the growing cryptocurrencies.

"If you look at GPUs across the world, the inventory in the channel is actually quite lean. And so we're working on replenishing that inventory," Su said. "Our priority, though, really is on our core market, which is the gaming market."

Nvidia, AMD's biggest competitor, is taking the opposite approach. The company is developing a mining specific chip that directly addresses the growing market. A product page for an unreleased Nvidia-based card says a mining-specific chip can increase the hash rate by 36% compared to other general purpose cards.

Cryptocurrencies are notoriously volatile, with hundred dollar moves in the price of Bitcoin the norm, rather than the exception. The currencies have generally been increasing in value but the volatility could greatly affect demand for GPUs as interest wanes with declines prices.

Su addressed this concern, saying that AMD is "doing quite a bit to make sure that [it] protects against any downside as it relates to cryptocurrency," which could also be a reason AMD isn't developing a mining specific card. "We're ensuring that we're not over-calling the demand," Su added.

AMD is up 34.66% this year.

Markets Insider

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AMD: Cryptocurrency mining won't be a 'long-term growth driver' (AMD) - Business Insider

Philippine business press, Businessmirror, has reported that the government has been yet to approve a single virtual currency exchange application. The Philippine central bank, Bangko Sentral ng Pilipinas, introduced regulations for virtual currencies earlier this year which focussed heavily on creating guidelines for the operations of cryptocurrency exchanges.

Also Read:Philippines Central Bank Issues Guidelines for Virtual Currency Exchanges

The Philippine Central Banks Supervision and Examination Sector told Businessmirror that it has not approved any applications for entities seeking to register and establish cryptocurrency exchanges. It has also been revealed that the Bangko Sentral ng Pilipinas (BSP) has so far received less than 10 applications.

BSP representative, Chuchi Fonacier stated that increased Filipino bitcoin adoption had prompted the development of cryptocurrency regulations. We have observed acceleration in transaction volume based on our survey of top industry players last year, prompting us to institute a regulatory framework. We have no updated statistics to date, as these will come from the regular reports that registered entities will submit to the BSP.

The Philipines bitcoin regulations focus upon articulating a juridical framework for the operation of cryptocurrency exchanges, in addition to providing an inclusive regulatory apparatus for cryptocurrency-based remittance services.We want to maximize the benefits from this technological innovation, while adequately managing the risks that come with it. Virtual currencies can help accelerate the delivery of financial services [e.g., payments and remittance] and lower the cost of transactions, which is consistent with our broader financial-inclusion agenda, Fonacier said.

Officials have consistently iterated the Philippines governments intention to simultaneously foster growth and innovation in the cryptocurrency industries, whilst restricting the risk of bitcoin being used for money-laundering or terrorist financing activities. We are particularly keen on addressing money-laundering risk, that is why part of the responsibilities of a virtual-currency exchange is to comply with established anti-money laundering rules, such as know-your-client procedures, as well as proper reporting to the AMLC [Anti-Money Laundering Council].

Despite local press describing the Philippines stance toward bitcoin as a first of its kind in Asia, the regulatory apparatus developed by the BSP appears to be limited in its scope. The regulations focus heavily on providing guidelines for the operation of virtual currency exchanges, yet have largely neglected to develop regulatory or taxation frameworks for general cryptocurrency use or mining. There has also been little effort made to promote and educate Filipino citizens about cryptocurrency, which will be vital for greater Filipino bitcoin adoption as only one in three Filipino citizens is reported to have access to the internet. Furthermore, the BSP has designed regulations so as to monitor the Filipino bitcoin economy through mandatory reporting submitted by virtual currency-based businesses of which the BSP is yet to approve a single application.

Do you think that the Philippines virtual currency regulations are failing to attract and foster investment in the cryptocurrency industries? Share your thoughts in the comments section below!

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Philippines Government yet to Approve Cryptocurrency Exchange ... - Bitcoin News (press release)

Russian legislators are trying to use elements of the New York licensing system and Japanese laws to shape Russias cryptocurrency legislation.

Russia is working on its own legislation for cryptocurrencies and is actively examining the expertise of other nations in this respect, according to Russias Internet ombudsman Dmitry Marinichev.

In an interviewfor the Russia 24 TV channel on Wednesday, Mr Marinichev said that the Russias cryptocurrency legislation will be similar to a degree to that of Japan, and to a degree to that of New York (the New York DFS licensing system).

Concerning the current popularity of Bitcoin trading, he said he would not recommend Russians to participate in Bitcoin trading in the near future, as the risk of loss is too high. One of the factors for that is the pending system upgrade.

Mr Marinichev added, however, that the perspectives for Bitcoin and other cryptocurrencies are better in the longer term talking of a time horizon of at least a couple of years.

He stressed the increased understanding of Russian authorities of blockchain and Bitcoin. Indeed, even the Central Bank of Russia has this year become way more welcoming towards blockchain technologies and cryptocurrencies. This stance has marked a stark contrast to the banks initial position that treated Bitcoin and its likes as money surrogates and warned that any activities associated with them may be treated as violations of AML laws.

In May this year, it became clear that the Ministry of Telecom and Mass Communications expects the legal provisions for the legalization of the DLT technologies like blockchain to be in place in 2019. In March this year, Russias Prime Minister Dmitry Medvedev joined the supporters of blockchain technology by instructing the Ministry of Telecom and Mass Communications and the Ministry of Economic Development to explore the possible applications of the blockchain technology during the preparation of the Digital Economy program.

Russian businesses have been increasingly adopting blockchain-based solutions and have been examining the use of cryptocurrencies in their operations. The latest news in this respect come from airlines. Earlier in July, Russias main airline Aeroflot-Rossiyskiye Avialinii PAO (MCX:AFLT), published a procurement notice for proposals for the implementation of crypto-currencies and related technologies in its operations. Another push in this direction has been made by Alfa-Bank and S7 airlinethat have partnered on a project that will allow selling of flight tickets based on the Ethereum blockchain.

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Russia's cryptocurrency legislation to resemble that of Japan, US - FinanceFeeds (blog)

General Crypto is a hedge fund that provides high net worth investors with liquid exposure to cryptocurrencies like Bitcoin, Ethereum, and Ripple.

PALM HARBOR, FL, UNITED STATES, July 26, 2017 General Crypto, a $25 million cryptocurrency hedge fund, has launched to provide high net worth investors with liquid exposure to the cryptocurrency market and digital assets that they believe could run the technological infrastructure of the future.

Since the start of 2017, the total market cap of cryptocurrency has grown by more than sevenfold to over $100 billion USD, with coins like Ethereum rising in price more than 5,100 percent.

General Crypto was founded because we believe that cryptocurrencies are one of the most powerful forces in technology since the proliferation of the internet, says co-founder Zach Hamilton. "Our Fund offers professionally curated exposure to this entirely new asset class, handling everything from compliance and reporting to security and custodian.

Hamilton is a venture capitalist at Venture51, an early-stage VC firm based in Southern California, and has been an active cryptocurrency trader since 2014. Hamilton has overseen limited partner relations, portfolio management, due diligence, and fund sourcing for several early-stage technology funds.

We believe theres no better asset class in the world today, says Hamiltons partner and co-founder Logan Kugler. The growth potential of cryptocurrencies is enormous and investors are fully liquid at all times.

Kugler is a serial entrepreneur who has written about advances in technology, including cryptocurrency, for Popular Science and Association of Computing Machinery, the worlds largest professional society of computer scientists. Kuglers been following cryptocurrency for the last half decade.

The Funds advisors include Bill Shihara, co-founder and CEO of Bittrex, one of the worlds largest cryptocurrency exchanges, and Venture51 managing partners Ryan Swagar and Brandon Zeuner.

We invest with a process very similar to that of a venture capital firm, with qualitative analysis being weighed much more than quantitative, says Hamilton.

General Cryptos investing strategy is tied to an exhaustive assessment of cryptocurrency tokens with underlying technology that stands to revolutionize an existing system and solve a large, current, and real-world problem.

We hold 10 to 15 positions in coins we believe could run the technological infrastructure of the future, says Kugler. We see a lot of parallels to the internet circa 1993, and were specifically investing in coins with durable use cases.

General Crypto has invested in Ripple (XRP), a cryptocurrency backed by Google, that facilitates the near instant transfer of money globally. It takes days to send an international wire transfer, but XRP takes four seconds.

Weve been holders of Ripple and XRP for a very long time, both personally and through the Fund, says Hamilton. We think that cross-border payments is the perfect first real-world enterprise use case that the cryptocurrency world has produced. Ripple is already creating value for banks in reducing payment friction, thus saving the average consumer money.

The Fund also has positions in Golem (GNT), a crypto asset that promises to turn the worlds idle computing power into a connected supercomputer, and Factom (FCT), a crypto asset that provides immutable records which could revolutionize massive databases from real estate titles to bank audit records.

General Cryptos limited partners include high net worth individuals and family offices in search of exposure to the cryptocurrency market without a long lockup period or an investing thesis that lies on shaky regulatory ground. The Fund is also being approached by traditional financiers who are interested in adding cryptocurrencies to their portfolio. Currently, all LPs are U.S.-based, but General Crypto has been receiving interest from China, India, Japan and Australia.

General Crypto has no management fee and only a 30-day lock-up.

The cryptocurrency market is known for its volatility and speculation, which General Crypto expects as part of its investment thesis.

Growing pains are not a negative thing when you are getting taller, says Hamilton. The current speculation is only dangerous to those that are expecting to get rich quickly, or to those who are investing in something they don't understand.

http://www.generalcrypto.fund

The publication of a press release on this page should not be viewed as an endorsement by CoinDesk. Customers should do their own research before investing funds in any company.

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$25 Million Cryptocurrency Fund Launches to Capitalize on the Internet of the Future - CoinDesk