Money makes the world go round, it also brings worlds crashing down. The great depression of 1929 and the global financial crisis of 2008 were stark warnings of what happens when there is little regulations or strict adherence to rules. The ICO has widely been regarded as the wild west of cryptocurrencies, and the lawmen are now in town to tame it.
According to reports from the DC Fintech Week conference, yesterday, on the 7th of November, William Hinamn, director of Corporate finance for the Securities and Exchange Commission (SEC), announced more detailed guidelines for Initial Coin Offerings (“ICO”).
The guide is supposed to protect investors, however, in its current form it only provides basic ICO registration information. This is hardly of any use to participants or advisors.
SEC Guidance Is Extremely Limited
At the moment there is very little information from the SEC, this means that the market has to scavenge information from public statements and congressional testimonies. But Trifin Roule a publisher at a leading investigating website, Abacus Journal put together his research into the subject. Case in point, an investigation into Decentralised Autonomous Organisations, in July 217, was when it was discovered that the SEC considered ICO tokens as securities and subject to federal securities laws. Similarly in December that year 2017, SEC Chairman Jay Clayton provided his views on ICO markets and cryptocurrencies, in a public statement. He cautioned investors while encouraging market participants and their advisors to do further research before taking any action.
Following this familiar pattern, the market had to follow Mr. Clayton's testimony on ICOs to the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission, in February of this year. In his testimony, he confirmed that ICO tokens and their increase in value were both considered a security.
Finally, the annual SEC enforcement report provides an insight into SEC actions in pursuing unregistered and fraudulent activities.
This latest declaration by Mr. Hinman joins a long list. It is however hoped that this will see the start of a new and more systematic disbursement of information.
A Formal Guide From The SEC Has Been Needed For some time.
A comprehensive guideline by the SEC would go a long way in providing the much-needed clarity for ICOs and enable a more conducive environment for innovation. This sort of explicit definitions would help with registrations as well as afford markets an understanding of how the top body looks at tokens
It is also easier for the governing body to flesh out guidance as existing security laws and rules can be used to regulate ICOs. Also amending guidelines takes less time than amending existing rules or securities legislation.
Trifin Roule, The Man Behind The Words.
With decades worth of experience in legal analysis of anti-money laundering, counter proliferation financing and counter terrorist financing laws and regulations dozens of jurisdictions. There is a long and exhaustive list, that note his credentials with the digital asset accounting and audit as well. Suffice to say Trifin Roule is an excellent choice for authoring this report.