US SEC’s Perspective on Initial Coin Offerings (ICO) and How it has Changed Along the Way
Ever since the US Securities and Exchange Commission (SEC) laid eyes on Initial Coin Offerings (ICOs), they’ve done nothing but impose rules and regulations. This is not entirely bad, as it encourages consumers to be cautious of scams. One of their key concerns was that an ICO would be considered a security, which has also startled many who have since invested through ICOs.
In an interesting post by CT, a complete perspective on SEC’s view on ICOs has been shared. In particular, it addresses “current guidelines”, how lax the commission has since become and other important facts (https://cointelegraph.com/news/unpacking-schnorr-signatures-blockstreams-musig-to-improve-bitcoin-transactions). Here’s a debriefing of what has been shared:
Latest Look At The ICO Guideline
As previously mentioned, the US SEC proposed a guideline amidst the several scams that took place in most of 2017 and 2018. Here’s what was originally shared:
- “ICOs can be securities offerings.”
- “They may need to be registered.”
- “Tokens sold in ICOs can be called many things.”
- “ICOs may pose substantial risks.”
- “Ask questions before investing.”
The five points above were tailored to consumers, as the SEC also suggested similar tips for investors and “market professionals”.
Relaxing On The Guidelines
While the SEC did start addressing ICOs in a more conservative fashion, CT reports that they have since taken a different approach on the matters. In particular, it has been argued that the SEC is trying to “represent a tangible step forward in terms of treating crypto as a legitimate area of investment.” One of the tips that has since been offered via the guideline include:
“If fraud or theft results in you or the organization that issued the virtual tokens or coins losing virtual tokens, virtual currency, or fiat currency, you may have limited recovery options.”
Similarly, in August 2017, advise on the “pump-and-dump” scheme was shared, which went as follows:
“The SEC’s Office of Investor Education and Advocacy is warning investors about potential scams involving stock of companies claiming to be related to […] Initial Coin Offerings (or ICOs). These frauds include “pump-and-dump” and market manipulation schemes.”
2018 marks SEC’s softer side as they decided not to focus on the negatives, but a combination of both. An example of this is SEC Commissioner, Peirce, who has earned the title, “Crypto Mom”, for being supportive of it. In particular, Peirce has shared several viewpoints that reflect SEC’s more positive outlook on the crypto space.
Coin Telegraph assumes that the reason for more relaxed handling could be due to the fact that they are more knowledgeable now than they were back in 2017. In addition, the craze behind ICOs and the crypto world has neutralized or declined since, which may be comforting to SEC.
What’s To Come From SEC?
It seems like the SEC is currently seeking more “clarity” on the matter, as it has been reported that “detailed guidance on how tokens that we used in the decentralized networks should be classified,” is still troubling the SEC.
Many believe that SEC’s approach on cryptos should not be viewed as a complete shutdown. Chairman of CryptoUK, Iqbal V. Gandam was quoted saying the following:
“I think the approach is balanced. They [ the SEC] have not said that they are a poor/risky investment, but simply stated that the investor needs to be cautious.”
Overall, it is clear that the SEC still has some work to do, as they have yet to set firm outlines on how cryptos will be classified. However, it can also be noted that they are not completely against it – but instead, are looking for the knowledge needed to have a firm stance on the matter.