Trekking in a jungle of regulations!
Sweetbridge Community Update April 2018: Protocols, Product Launch, Crowdsale jurisdictions, and the way forward
We wanted to update our community on some of the significant accomplishments and milestones on the Sweetbridge journey so far. We have hacked through miles of regulatory tangles and it is time to update you on our progress. We wanted to be the good guys doing things properly, but that has required us to blaze trails, cut back when we ran into obstacles and scale slippery mountainsides.
We understood that our original plan for launching the Sweetbridge protocol would face some significant real-world challenges. Identifying exactly what those would be and how we would need to navigate them has been an expected challenge that we have been continually engaged in. At times it seemed like everything was going well, at other times it seemed like every direction was blocked by some tangled mess, but we are happy to announce we have made substantial progress. We now have line-of-sight to launch!
Original Plan — Our initial route
Our business model anticipates that there will be hundreds of millions of dollars in transactions daily entering and exiting Bridgecoin to various forms of fiat. This major commercial activity requires Sweetbridge to ensure that potential regulatory and compliance issues do not prevent us from moving forward or that these transactions can legally be undertaken. We have been working to ensure that the regulatory framework has been adequately considered to enable commerce transacted by our customers to proceed successfully.
As a result, we have conducted detailed regulatory and compliance due diligence in the jurisdictions where we have been focused initially. These include nine of the largest trading economies in the world. Moving the Sweetbridge vision forward in multiple jurisdictions simultaneously has meant understanding the detailed legal and regulatory requirements needed to conduct the commercial activity envisaged by the Sweetbridge protocol. These activities will be conducted by Sweetbridge licensed entities.
At this time, 11 financial services entities have been created — or are in the final stages of being created — and we are working with several additional entities with existing licenses. Regulatory clearance on using Bridgecoin as a commodity has been obtained in several jurisdictions in Asia, the EU and the US. We have legal advice that Sweetcoin as designed and marketed will not be considered a security in most countries.
To enable payments for goods and services using Bridgecoin, Sweetbridge financial entities will need money transmission licensing or e-money licenses. Months ago we began the process to get these regulatory licenses in anticipation of their future need. We believe it will become increasingly difficult to use cryptocurrencies for commercial activity without these licenses in the near future.
We are nearly ready to launch our initial products and to begin to operate commercially in these jurisdictions. This process has resulted in certain jurisdictions moving forward more quickly and therefore receiving more of our attention. In the US, the approach of the SEC in regards to these matters is still not clear and will take more time to determine, however, we expect to receive approval in due course.
As a result, we will be launching only within the countries in which we believe we have clearance to operate at this time.
Everywhere in the world — Our route forward
We will continue moving forward in the US but will be ready to launch operations in Europe and other areas of the world shortly.
As Geoffrey Moore articulates in Crossing the Chasm, in order to generate mass adoption, a new solution must offer something that is as good as the current solution in addition to something else that the current solution does not provide. The same is true with Bridgecoin.
Bridgecoin is a currency that is designed for large scale commerce. Much of the regulatory concern in relation to cryptocurrencies relates to the lack of transparency in the systems including the fear of money laundering, the obfuscation of identity and location of wealth. Capital preservation systems have value and can be addressed in the Sweetbridge ecosystem but the real focus is on facilitating and encouraging trade and commerce. In trade, people generally do not want anonymity.
Sweetbridge deals with the concerns of governments and stakeholders who are unwilling to lose the visibility that they currently have in the existing financial system. Sweetbridge is committed to operating at a level of banking transparency that rivals or surpasses that which exists in the current banking system of each jurisdiction in which we seek to operate.
Sweetbridge’s KYC (Know Your Customer) / AML (Anti-Money Laundering) protocols and requirements will be fully transparent and compliant with all relevant laws. Sweetbridge believes that this is an absolute requirement for successful commercial activity in a cryptocurrency. The Sweetbridge protocol facilitates AML and KYC compliance and enables parties to have full visibility into trading counterparties. This explains why Sweetbridge cares about regulatory compliance — we are building the network to conduct real-world trade. This requires the movement of large amounts of money which cannot happen in a non-transparent method. Success requires us to lead in the area of transparency, AML and KYC, not try to avoid it.
Currently, banks are increasingly leaving the payments and settlements business, creating opportunities for alternative trade models to plug the gap. This is one of the reasons Sweetbridge have been so intent on getting regulatory compliance right from the start. To be clear — this represents a mountainous amount of work, has occupied a significant portion of our time and has cost a lot of money, but it is starting to bear fruit.
The level of liquidity required to support real commercial activity does not exist in the current cryptocurrency environment, and we plan to increase that substantially. Cryptocurrencies currently are difficult and expensive to convert to fiat. The Sweetbridge protocols and Sweetbridge licensed financial entities are being recruited to create this liquidity.
Originally, we were planning to go live with our product once we had regulatory approval to launch our own exchange for converting Bridgecoin to and from fiat. This would have allowed Sweetbridge to offer the lower-cost liquidity needed for it to be adopted in commerce. This is still our goal, but we don’t want to further delay the ability for our members to obtain loans against cryptocurrencies, so we will launch prior to having our own licensed exchanges as part of our network.
Stage 4 Crowdsale Updates and Product Launch
We are expecting to receive the final approvals needed to launch our initial products in various jurisdictions shortly. Over the next 60 days, we will be releasing product information, showing demos to our community and we will release our first applications on or before the close of Stage 4 release.
We will also be publishing a new crowdsale document to reflect updates to Stage 4. In this we will explain that accredited individuals and organizations will be able to participate in North America prior to general public in the US. We don’t like the fact that this is true, but it is the reality of the current regulatory environment. Many of these individuals have large cryptocurrency holdings and being able to access the value trapped in these holdings without selling them is of particular interest to these large crypto holders under current market conditions.
We have had tremendous support and interest from individuals in locations where we don’t yet have approvals to operate. Many have already gone through our Membership application process. We want to make sure that all of our supporters have an opportunity to participate in the discount economy made possible by Sweetcoin.
Therefore, we will be breaking the Sweetcoin release in Stage 4 into country-based releases that are proportionate to the interest registered by individuals within each country to date. Stage 4 will be broken into as many as 11 sub-stages (4.A — 4.K), depending on the timing of regulatory clearances in the 11 founding countries. This means we will be releasing $3M to $7M (average of $5M) Sweetcoin through each of these 11 country-specific Stage 4 releases.
Any balance of Sweetcoin remaining from the $54M originally targeted for the Stage 4 release will be held either for future release as the network grows or for users that:
- Have registered an interest in Sweetcoin by signing up before the first Stage 4 release
- Have gone through our membership process successfully
- Live in countries or are citizens of countries in which we are not yet operating
We will not be predetermining the pricing on the Sweetcoin after the first six months of Stage 4 and beyond, but we will be providing a discount of 10% on the market price to anyone that buys Bridgecoin and places it in a queue prior to the release of Sweetcoin within their country.
As each new jurisdiction is released, new customers will be entering the system who will want to use Sweetcoin to receive discounts. This is important because it will protect the discount value of Sweetcoin that has already released. Sweetcoin is not being sold like most cryptocurrencies as an investment, it is being sold so users can receive discounts when they lock it in their Sweetbridge wallet. For each month that a user’s Sweetcoin is locked up, that user is entitled to a discount on fees incurred from using the Sweetbridge network.
It is highly likely that Bridgecoin and our applications will be approved for use in some of these countries prior to the ability to sell Sweetcoin as a method of discount. This should further increase the demand for discounts from Sweetcoin once it is released and limit the fall of discount pricing on Sweetcoin, as the typical buyer will want to lock it up to obtain the discounts instead of selling it on a secondary market.
Summary
We are pleased to be able to start talking about our long-term plan to operate licensed exchanges and are excited to start getting user feedback on our digital wallets. We want these to be fully compliant within local regulatory environments and set the standard for a new type of cryptocurrency — a transparent cryptocurrency designed for commerce.
We will also be seeking feedback from our community as we begin releasing our user interface designs, showing demos and releasing beta systems for testing.
The next few months will be exciting. Stay tuned!
About Sweetbridge
Sweetbridge is a new economy built for commerce that enhances the world’s current economies. Sweetbridge and its alliance partners offer a unique set of blockchain protocols, applications and crypto-economics to create an economy of opportunity for all participants. The goal of Sweetbridge is to transform brittle, industrial-era commerce through decentralized industry ecosystems that create a faster, fairer value exchange, unleash working capital, better utilize resources, and optimize talent for the benefit of all participants. For more information, follow Sweetbridge on Twitter at @sweetbridgeinc or visit https://sweetbridge.com.
