On Saturday, November 10, 2018, the U.S Securities and Exchange Commission (SEC), took to its Twitter account to express the following:
Five things you need to know about ICOs: https://t.co/N1cfvEjmM6
— SEC_News (@SEC_News) November 10, 2018
As seen above, crypto investors are being advised on what Initial Coin Offerings (ICOs) are and things to keep in mind when users decide to choose them as a choice of investment. This, however, is a reminder, as the commission last updated the five important facets towards the end of August 2018. Regardless, interest in the crypto sphere hasn’t died off as there are always newcomers making their way in. Let’s revisit the
Five Things You Need to Know About ICOs
1. ICOs As Securities
According to the SEC, ICOs may be seen as securities offerings and supposedly, “fall under the SEC’s jurisdiction of enforcing federal securities laws.”
2. ICOs Might Require Registration
The need for ICOs to be registered only applies to those that are seen as securities.
3. Token Sales Can Take on Different Things
When a firm conducts an ICO, they are raising funds by exchanging tokens. This being said, SEC noted that just because a token is deemed as “utility” doesn’t mean it will automatically be disregarded as a potential security offering.
4. ICOs Might Be Risky
Regardless of whether or not an ICO is registered, there are always some risks attached (just like with any investment). Since ICOs are vaguer, in the sense that not a lot of reporting is required on behalf of the firm conducting them, it can be an easy tactic for scams, which have been the main problem in most of 2018.
5. Always Ask Questions
Last but not least, questioning the type of investment on hand and conducting the necessary research is vital, as it is the foundation to making returns on investment (ROI) while ensuring one is well educated on the possible risks.