Many companies have been turning to ICOs as a mean to raise funds for their projects. This is also beneficial to consumers, as they are given the opportunity to invest in them.
Unfortunately, not every individual is educated on the way ICOs work and what they are considered in terms of assets. Furthermore, many scams have been surfing the internet, with as little as a project idea and a fake team.
SEC has recently published a guide onto its official website and considers it as an educational tool to distinguish sound projects from scams. This is important given the fact that many projects have strongly suggested high and unattainable ROIs, which is something many investors are attracted to.
The guide seems to have highlighted some key things consumers need to know, including:
- The possibility that ICOs can be considered as securities and not just utility tokens
- Given ICOs are securities, they must undergo registration processes with SEC
- ICOs, like any investment, has risks tied to them, hence doing research is crucial
- Ensure to request details to clarify any confusions prior to investing
The next section covered in the SEC’s guide has been tailored for investors specifically. It addresses the following issues:
- Possible overseas traveling of funds without investors’ knowledge
- Doing research
- If an investment sounds too good to be true, be cautious
- Understanding the notion of exchanges and how it implies to existing products
Finally, the SEC Guide also ensures that companies aren’t sending the wrong idea when it comes to advertising their projects. Some of the areas that have been underlined, especially to ensure that frauds do not take place include:
- Promoting products in a way that does not violate the Securities Exchange Act of 1934
- SEC protects investors and expects the same from businesses
- SEC Report of Investigation on Coin/Token Offerings
- Be educated on what needs to be registered
The efforts made by SEC clearly shows that it does not necessary block cryptocurrencies, but rather focuses on protecting the different players involved. This guide is not the only one to be offered by SEC, as they previously created howeycoins.com to show how easily one can get tricked into a project.
For more on SEC’s ICO guide, go to: https://www.sec.gov/ICO