Announcement on Recent ICO RulingsThere had been a spate of rulings by regulators recently on the so-called Initial Coins Offerings (or ICOs), beginning with the United States SEC, followed by Singapore MAS, and now by the China central bank. In order to put things in perspectives, it is quite important for us to analyse and comments on these developments in regards to FARAD.
First, regarding the US SEC and Singapore MAS: the ruling is clearly meant for parties offering ICOs which in essence had the purpose and intent of the “coins” being a substitute for securities offering or share offerings. This is clarified by performing what is termed as “Howey Test”. Under the Howey Test, a transaction will be classified as security if:
- It’s an investment of money
- There is an expectation of profit
- The investment of money is a common enterprise
- The profit comes solely from the effort of the seller or third parties
Second, regarding the Chinese central bank warning: the warning comes at the backdrop of so many ICOs being offered by Chinese parties or entities, to the Chinese public. What is peculiar when comes to these Chinese ICO offering, is the aggressive use of the so-called “Chinese exchangers”, which basically functions as market intermediaries. These exchangers do take “fiat currencies” (i.e. Yuan), for people to subscribe to these ICOs, which essentially makes them to be operating in the “investments intermediation” business. The warning is clearly directed to many exchangers in China and the ICOs being promoted by or through those exchangers.
It is important to note that all regulations thus far, DOES NOT specify or makes cryptocurrencies being illegal or outlawed. What it does is to ensure that the public are not being taken into cryptocurrencies to be an investment scheme or investment program, with promised of returns on investments and alike. Many of the ICOs of late are being touted as investments and being promised with multiple times of returns on investments. And worse still, many ICOs thrived on aggressive marketing by getting people to buy the tokens with fiat currencies, and aggressively marketed as exchangeable to fiat currencies at its multiples. This what makes these ICOs to be vulnerable and becoming a highly speculative investment.
FARAD is purely a TOKEN SWAP program, which strictly defines that we only accept BTC or ETH as the tokens acceptable to be swapped with FARAD. We don’t deal with cash or accept cash. Furthermore, we strictly defined the conversion ratios between FARAD and ETH. FARAD is part of Ethereum ecosystem development, with the notion of stable tokens as its agenda. FARAD should not be seen and used as an “investment programs” or “investment schemes”. The risks of FARAD lies with it’s business model, that is building a healthy ecosystem backed by the energy storage industry, and reliance on the Ethereum Blockchain systems.
FARAD had clearly refused to be associated with any “cash exchangers” from the early days due to the risks of being identified as investments program (in China or elsewhere). For that, we may have suffered slacking demands coming from anyone with “cash exchanging” in mind.
FARAD is in essence a Distributed Autonomous Organisation (or a DAO), which means that it does not exist within any specific jurisdiction and neither any specific country; even though the parties supporting the FARAD DAO do have physical and legal jurisdictions. A cryptocurrency (such as BTC or ETH) is actually a DAO, and hence FARAD should always remain as a DAO.
Furthermore, FARAD had from beginning avoid the use of the word cryptocurrency, and instead use the word Crypto-Token or Cryptoken; and the reason is very clear - that is to avoid the misrepresentation of the usage of the label: “currency”. A Cryptoken is NOT A CURRENCY, by
any definitions of any forms of currency. Even though not a currency, this doesn’t mean that a Cryptoken may not have any value. A Cryptoken is a Digital Asset, or Digital Commodity. FARAD is a Cryptoken that fits this definition, and hence could have values assigned to it.
After the current TOKEN SWAP program, FARAD will continue to operates within Token Swaps framework. Token Swaps is an exchange between token with another token. For example, FRD would be directly exchangeable with any ERC20 tokens (such as ETH and alike).
In order to avoid any confusion, in the next immediate stage, FARAD will open it’s FARAD Store applications. FARAD Store, in essence is a store for exchanging FRD with goods and services, and it will also function as a Token Swap platform. This is among other things that will come in the way of FARAD, and all along I have been explaining about having FARAD to be functioning as a complete ecosystem.
We have designed and programmed FARAD to be confirming to these notions as described above, in order not to be caught in the current ICO frenzy and confusions surrounding cryptocurrencies.
Henceforth, under the current situation, I would say that FARAD is the right model of blockchain ecosystems; hence we should avoid any speculations related to other so-called ICO’s in the market. FARAD is NOT an ICO within most of those definitions (of investments), and in its essence, FARAD is a token swap program, and a program for building a healthy ecosystem surrounding it.
To avoid any more confusions, let us drop the words ICO from all of our communications.
Thank you and best regards,
Dr. Wan Hasni
CEO, FARAD Program & Virtue Fintech FZ LLC
