Crowdfunding licences approved by ASIC, as crypto and blockchain mania continues to sweep the stock market

Crowdfunding Australia ASIC equity platform investing

The Australian Securities and Investments Commission (ASIC) granted licences to seven platforms on Thursday, allowing startups and small businesses to raise funds from the general public through these platforms, in exchange for an equity stake in the business.

The federal parliament initially passed equity crowdfunding legislation last March, with applications for the licences to run crowdfunding platforms opening in September 2017.

The platforms now approved to commence raising funds via crowdfunding include: Big Start, Billfolda, Birchal Financial Services, Equitise, Global Funding Partners, IQX Investment Services and On-Market Bookbuilds.

We’re likely to see others names added to this list in the near future.

The law is limited to unlisted companies seeking to raise capital that have less than $25 million in assets.

The new laws open the door for entrepreneurs who require access capital to help build their businesses.

Following the global success of crowdfunding platforms such as Kickstarter and Indiegogo, we could be on the cusp of a new form of investing that allows the average person to create and fund the business of their dreams or invest in the ‘next big thing’ at an early stage.

With that said, investments in companies at the early stages of their growth cycle often carry a higher degree of risk.

Kodak moment in cryptocurrency

Photography company Kodak has seen its share price slide over the past few years with the advent of new digital technologies for imagery replace its film development business.

However the company has made headlines this week with plans to enter the cryptocurrency space, announcing it will release its own cryptocurrency called ‘KodakCoin’ and offer a bitcoin mining machine called ‘KashMiner’ to the public.

Shares in Kodak surged over 300% on the news.

This is not a once off however.

Last month, beverage maker Long Island Iced Tea Corp changed its name to Long Blockchain Corp, the result, a 500% increase in share price.

Don’t be surprised if you see a company on the ASX change its name to ‘Blockchain Cannabis and Battery Metals Limited’ and see its share price rally.

Bitcoin and other crypto news

A proposed bill to ban cryptocurrency trading in South Korea, one of the world’s largest cryptocurrency trading markets, saw the price of bitcoin plunge.

Governments are citing potential money laundering as the reason why, however others see it as a desperate act to maintain control, as governments fear the public may break free from centrally controlled monetary and governing systems that no longer serve the interest of the people.

Further concerns have been raised around bitcoin recently, including the fact that 97% of all bitcoins are held by only 4% of addresses. This wealth distribution, or there lack of, is similar to what we already have in the ‘real world’ where 10% of people own 87.8% of the world’s wealth, according to a Credit Suisse Global Wealth Report published in 2017.

A similar Oxfam study found that the world’s eight richest people have the same wealth as the bottom 50% of the people in the world.

So whilst the claim is that cryptocurrencies are leveling the playing field, the above breakdown of bitcoin holdings shows that this may not be the case at all.

Other factors weighing in on bitcoin’s usefulness as a currency, and something we’ve covered before, is the extreme energy consumption required to power bitcoin, with forecasts that by 2020, bitcoin mining will consume the current global energy supply.

Now for some comic relief, The North American Bitcoin Conference (TNABC) scheduled to be held next week in Miami, stopped accepting payment for tickets to the conference in bitcoin due to high network fees and congestion.

Settlement fees for using the bitcoin blockchain exceed US$30 at certain times of the day.

In other news, Jamie Dimon, the head of JP Morgan who was largely responsible for creating the conditions that led to the 2008 GFC, came out this week saying he regrets calling bitcoin a fraud.

Whilst Mr Dimon was demonizing the crypto world recently, his company was in the background setting up a cryptocurrency futures trading desk and buying bitcoin. Who’s the fraud again Jamie?

Popular digital currency exchange Coinbase announced it will to be adding Ripple (XRP) to its platform in the near future, having recently added Bitcoin Cash (BCH).

Ripple also announced this week a partnership deal with MoneyGram, to test payments using XRP.

Even Facebook is investigating cryptocurrencies and how they can be incorporated with its social media platform, in a recent statement made by founder Mark Zuckerberg.

Whilst a risky and volatile asset class, millennials are seeing cryptocurrency as an opportunity to potentially rise the ranks of the social economic ladder and one day achieve the great Aussie dream of owning a house, but wait…

Apartment approvals surge

Keep eating your smashed avocados kids as building approvals for apartments skyrocketed in data released by the Australian Bureau of Statistics on Tuesday.

November building approvals were up 11.7%, despite economists forecasting a 1.8% decline. Even more surprising was apartment approvals up a massive 30.6%.

This was the third largest monthly jump in building approvals on record.

However it should be noted that these figures are lagging two months behind and housing prices in Melbourne and Sydney have cooled off in recent weeks.

The Aussie dollar jumped on the news.

China pulls pin on US Treasury purchases

The price of gold rose to $1,330/oz over concerns that China may slow down its US Treasury buying.

Chinese officials are seeing US debt as less favorable to other assets.

This leaves the US in a vulnerable position as China is their largest buyer of debt, not to mention the Chinese (and others) have been actively moving away from the dollar in recent times for settling trade.

This includes the soon to be launched Petro-Yuan for pricing and trading oil in the local currency. As we covered last week, the Petro-Yuan is set for launch 18 January on the Shanghai International Energy Exchange under ticker code ‘INE’.

The latest news is another chess move to check mate the dollar in what economist Jim Rickards calls a ‘currency war’.

China, always planning decades ahead, is somewhat secretive with its gold acquisitions, however they stated at the end of last year that the country had accumulated gold reserves of 12,100 tonnes at the end of 2016, compared to the US with a reported 8,133.

Although many sceptics question whether there is actually any gold at Fort Knox with an official audit of the gold reserves lacking.

With China signaling it will slow down on US debt purchases, the US Federal Reserve may become the buyer of last resort for US Treasuries in what some are predicting will be the beginning of the end for the US dollar as the world’s reserve currency.

With the International Monetary Fund’s Special Drawing Right (SDR) tipped to be a potential future replacement.

The SDR is a basket of currencies of the US dollar, Euro, Japanese yen, pound sterling and most recently added, the Chinese renminbi.

Small cap stocks this week

The ASX 200 is back at levels it began 2018 following a brief surge, closing the week at 6,070.10 points.

Despite the leveling out of the market as a whole, this week saw activity across multiple sectors, so let’s take a closer look at some stand out stocks from this week.

Fatfish Internet Group (ASX: FFG)

Riding the wave of cryptocurrency is Fatfish, who announced it has agreed to invest US$1 million into cryptocurrency mining startup APAC Mining Corp.

The deal sees Fatfish gain a controlling 51% stake in the startup and the ability to appoint two directors to APAC Mining’s board, which will be Crypto Financial Markets director Phillip Lord and Fatfish chief executive officer Kin Wai Lau.

The deal is to be funded using Fatfish’s existing cash reserves.

LiveTiles (ASX: LVT)

Artificial intelligence technology developer LiveTiles enters the lucrative manufacturing industry estimated to be worth US$2.2 trillion, via a partnership with the Clean Energy Smart Manufacturing Innovation Institute.

LiveTiles’ artificial intelligence and bot technology will be used to enrich interactions between workers and machines, and drive smart manufacturing processes.

Enhancements offered include the ability to rapidly uptake new technology that increases productivity, offer job growth, boost energy efficiency and safety, and reduce time to market.

BARD1 Life Sciences (ASX: BD1)

Study results from BARD1’s non-invasive ovarian cancer diagnostic study have come back positive.

Despite failing in the area of lung cancer last year, the OC-400 study revealed that BARD1-Ovarian was highly accurate in detecting ovarian cancer with an average area under the curve of 82% sensitivity and 79% specificity in the test sets. The study was performed on 400 ovarian cancer samples.

BARD1-Ovarian is a ELISA-based blood test for detecting early stages of ovarian cancer. The test works by measuring autoantibodies in the blood combined with the company’s proprietary algorithm to create a score that identifies the presence of ovarian cancer.

Phylogica (ASX: PYC)

Biotechnology company Phylogica announced this week that its Functional Penetrating Peptide (FPP) technology was able to stimulate an immune response and extend cancer survival rates through recent testing on mice.

Initial results showed that when combining FPPs with a tumour antigen, the average survival of mice with melanoma was extended by almost 100%.

Once a cancer is identified, the dendritic cells then break it down and present parts of the cancer (peptides) to T cells (a type of white blood cell). The T cells then expand in number and go on to attack and eliminate the cancer cells.

Tawana Resources (ASX: TAW)

Tawana remains on track to produce its first lithium concentrate from its 50%-owned Bald Hill project by the end of Q1 2018.

Ongoing drilling is planned at Bald Hill as the project is still largely unexplored according to the company, with drilling last month below the starter pit returning grades as high as 4.27% lithium.

Processing plant construction has advanced at the project, with steelwork installation and other necessary parts almost complete or commissioned.

Northern Cobalt (ASX: N27)

A scoping study has commenced at Northern Cobalt’s Stanton cobalt deposit, in the Northern Territory.

Part of its Wollogorang project, the company expects to release an upgraded inferred resource estimate by the end of Q1 2018.

In addition, several magnetic anomalies where picked up nearby in a recent airborne magnetic survey, which, according to the Northern Cobalt, resemble similar characteristics to Stanton.

Queensland Bauxite (ASX: QBL)

Another week goes by, and yet another big announcement from Queensland Bauxite, who is reveling in its decision to move into the world of cannabis.

The company announcing this week that its 55%-owned subsidiary Medical Cannabis has secured an agreement to bring Canada-based Canntab Therapeutics’ pharmaceutical grade medical cannabis pills to the Australian and Asian markets.

The Canntab pills provide a constant drug concentration between 12 and 18 hours and may prove to be a threat to traditional synthetic medication produced by Big Pharma.

Elixinol Global (ASX: EXL)

Debuting on the Australian stock exchange this week and becoming the latest addition to the cannabis family was Elixinol Global.

Listing at $1 per share, the company surged to hit $1.75 on its first day and closed out the week at $1.815.

As part of the IPO, Elixinol Global is to acquire Elixinol US, Elixinol Australia and Hemp Foods Australia, which when combined, cultivate, manufacture and distribute hemp and medicinal cannabis-based products through the US, Australian and a number of other countries.

The week ahead

Employment data comes out on Thursday, with 18,000 jobs forecast to have been created, the unemployment rate tipped to remain steady at 5.4%.

Over in the US, markets are closed on Monday for the Martin Luther King Jr. public holiday, with numerous reports out on industrial, housing, jobless claims, petroleum inventories and business outlook data all due for release midweek.

Filip has written in both Australia and abroad during his career, covering everything from the global economy, politics and geopolitical issues to commodities and small cap stocks on the ASX.