The cryptocurrency industry brings in billions of dollars of revenue each year, which seems to come more from retail investors than anyone else. Most platforms introduce themselves to the community with an ICO or a pre-ICO, giving a chance for consumers to get a discounted rate on the tokens before they reach full value. However, the CEO of NASDAQ doesn’t see things that way.
At the Future of Fintech conference, which recently took place in New York, the CEO said,
“To make it no rules at all, when companies can just willy-nilly take people's money and offer no information at all, with no governance, that sounds to me like you're taking advantage of people.”
The CEO refers to the investors as victims of these platforms, as they have limited access to ongoing information about the way they will function.
The SEC requires that cryptocurrency companies release the same information that financial institutions provide in IPOs, but the crypto industry isn’t regulated at all. CEO Adena Friedman also noted at the conference that none of the transparency that banks offer, which makes her nervous that the they are only raising capital through the ICO.
During an ICO, the crypto exchange puts up their tokens for sale, similar to the way that a crowdfunding campaign works. However, instead of earning rights to certain stakes in the company, they will receive “utility tokens,” granting them access to the platform. Though they are sometimes supported by physical assets as incentive, they usually don’t offer anything at all.
For instance, less than a month ago, Block.one was started up in the Cayman Islands, raising $4 billion in their ICO as the biggest offering this year. All of these funds were raised before the platform was even launched.
Recently, the SEC begun to put more pressure and restrictions on ICOs. Some have received warnings, while others have been shut down entirely. So far, the SEC Chairman hasn’t found an ICO that isn’t essentially a securities offering. In an interview with CNBC, he noted that the NASDAQ may even consider a move to digital currency as the industry matures and eliminates the common problems in it.
In April, NASDAQ established a partnership with an exchange by Tyler and Cameron Winklevoss called Gemini. With this deal, Gemini will be able to use the surveillance technology that NASDAQ owns. In a statement about the partnership, the CEO said,
“We feel more comfortable partnering with someone as opposed to becoming one of those markets — at this point because it is a completely unregulated market.”
As far as cryptocurrency goes, the CEO is still on the fence.
“We have to assume this is something that could become something really interesting and a real layer of the internet,” she said. “It could also die on the vine and become the Beanie Baby phenomenon.”