GAME, MobileGo, and Crypto Regulation
The news that just came out of China sent a shockwave through the markets, but we’re not unduly concerned about the long term. Ultimately, crypto needs to come out of its Wild West phase to thrive, and we’re going to be at the forefront of that.
The Chinese authorities have a habit of putting a crimp in crypto’s style. The ‘China bans bitcoin!’ meme was credited with catalysing the lengthy bear market of 2014 and 2015, though in practice the People’s Bank of China only prevented exchanges from moving money as easily as they had been doing. This time, following concerns that such activities could ‘disrupt the social order’, a series of government bodies have stated that Initial Coin Offerings are to end in the country: it is now illegal to raise money through cryptocurrency crowdsales in China. Whilst it is practically impossible to unwind past crowdsales, a number of ICOs in process are to be halted and funds returned.
That news triggered a sharp sell off in the (arguably overbought) cryptocurrency markets. Bitcoin plummeted from around the $5,000 mark to $4,000, with Ethereum and most other coins following suit. The markets have recovered much of these losses, though questions are still outstanding about the impact of the new scrutiny on ICOs and the digital tokens they issue – particularly since other countries are also showing signs of tightening regulation amid concerns about fraud, money laundering and terrorist financing. Singapore, a financial hub and popular location for ICOs in the past, has indicated its intentions in this regard, as has the US Securities and Exchanges Commission (SEC).
MobileGo
Whilst MobileGo fully intends to comply with all relevant legislation, the company is not based in the US or China. As an Eastern European company, it does not fall within the current round of regulatory developments. And, whilst tighter regulation may well come in the future, the authorities in this region have historically taken a lighter-touch approach than the US and China.
In any case, MobileGo is used by an established company with an existing crypto token and growing industry backing, and we are confident that we will be able to negotiate and regulatory changes that may come.
Exchange listings
One factor that could have some impact is the SEC’s recent announcement that cryptocurrency exchanges may be subjected to securities regulation. This (entirely reasonable) move would see crypto tokens tested against the standard measure for securities – namely, the Howey Test – and, if they meet that definition, then the exchanges that trade them will need to fulfil greater regulatory obligations. It’s actually a fairly logical approach: if it quacks like a duck, it probably is one, and should be treated as such. (One of the critical elements of the Howey Test centres around dividends, which is why so many major crypto projects have sought to deliver value to holders in other ways.)
As a straightforward digital currency, gamecredits is covered by existing regulation on cryptocurrencies and should be treated no differently to bitcoin. MobileGo is slightly different, since it is a ‘2.0’ token that exists on the Waves and Ethereum blockchains, and has uses that go beyond value transfer. It is possible that some exchanges may choose not to list MGO, or may take longer to make a decision to list it, in the light of the SEC’s future course of action. At this stage, it’s impossible to say what the impact will be on MGO or the wider cryptocurrency ecosystem. However, we do know that we will always have exchanges to trade on, including decentralised ones such as the Waves DEX. We also know that we have a compelling business model and use case. And lastly, we understand that clearer regulation is a prerequisite for mainstream adoption and access by new waves of customers who would otherwise not engage with cryptocurrency.