VIRTUAL CURRENCIES VS. BLOCKCHAIN
Virtual Currencies are digital mediums of exchange such as Bitcoin operating in largely unregulated environments with minimal regulatory oversight. It is critically important to distinguish Virtual Currencies as a controversial, potential medium of exchange for transactions vs. the underlying blockchain technology. Blockchain is a technology platform that provides a distributed ledger to track and bundle transactions.
VIRTUAL CURRENCIES & COIN OFFERINGS
In the US and most developed nations, Virtual Currencies are regulated as commodities and are not viewed as currencies/securities. As a result, Virtual Currencies and Initial Coin Offerings (ICO) are not subject to many of the substantive securities regulations protecting investors dating back to the Securities Act of 1933.
The lack of regulation has opened the door to fraudulent actors pretending to offer opportunities in ICO’s and Virtual Currencies. There are also perfectly legitimate companies in this space that are adversely impacted by these fraudulent actors.
For now, our view is that until ICO’s and Virtual Currencies are properly regulated, we strongly urge our clients and all investors to be vigilant when considering investing in this space.
The Securities and Exchange Commission (SEC) launched Howeycoins, an educational tool to alert investors regarding investments in Virtual Currencies and coin offerings:
Howeycoins looks enticing and one may even consider investing with them. However, when you get that far, you are directed to the following SEC web-page:
To read the full list of investment red flags, please visit the SEC website https://investor.gov.
On the other hand, Blockchain, the technology behind Virtual Currencies, is in our opinion the technology of the future. The technology is capable of revolutionizing global trade, data security, supply chain management, and financial instrument clearing. Blockchain is being embraced by industry leading corporations in 3 profound ways, in addition to allowing Virtual Currencies as payment:
Mining Enablers: Companies that either create equipment and/or tools to enable creation of new blockchains or are mining blockchains as their main business.
Solutions Providers: Companies engaged in blockchain as service providers. They assist businesses & organizations in the creation and implementation of blockchain applications.
Adopters: Companies that primarily use Blockchain technology to increase operational efficiencies, optimize settlement processes, enhance the customer experience and/or increase data security/integrity.
The Innovation Labs Blockchain Innovators Index targets companies that may benefit from blockchain technology, many of them being blue-chip companies across a wide range of sectors. Below are the top 10 holdings currently :
- Visa (V)
- Microsoft (MSFT)
- Amazon (AMZN)
- Intel Corp (INTC)
- Tencent Holdings Ltd (700 HK)
- Taiwan Semiconductor (TSM)
- Mastercard (MA)
- Oracle (ORCL)
- BP (BP / LN)
- Cisco Systems
We prefer investing in established companies that will benefit from incorporating Blockchain technology, instead of higher risk and poorly regulated initial coin offerings or Virtual Currencies.
 Innovation Shares – https://www.innovationshares.com/
Touchstone Advisory, LLC is a Registered Investment Adviser with the U.S. Securities and Exchange Commission (CRD# 288370 / SEC# 801-110510). Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
Investment advisory services in the United States provided through Touchstone Advisory, LLC as a fully separate service from the non-US services provided through Touchstone Advisory, Ltd (https://touchstone-global.com). Touchstone Advisory, LLC and Touchstone Advisory Ltd are affiliated but operate as separate entities.