BankThink: US Securities and Exchange Commission to crack down on start-ups but ignore the mistakes made by large banks


nnnThe US Securities and Exchange Commission (SEC) recently released The DAO report triggered the ICO market turmoil. There is no denying that the ICO market has a major problem, but emerging markets will always have some problems. But the problem is that the SEC will define the tokens issued by ICO as “securities”, which again limits the ability of start-ups to obtain much-needed capital. At the same time, the SEC’s erroneous omission to large banking institutions will only make people think that it is in the maintenance of deep-rooted economic and social interests of large institutions.n
nnTranslation: Clovern
nThe Securities and Exchange Commission (SEC)’s understanding of “initial digital currency issuance” is understandable. ICO market there are major problems, but emerging markets will always have some problems. Unfortunately, the SEC’s recent restrictions on the sale of tokens, which are defined as “securities” in this way, are totally unsuccessful and again limit the need for start-ups to seek bankers or venture capitalists in advance to raise The power of this urgently needed fund.n
nSEC’s recently released survey report was specifically issued for the DAO-related tokens, but its impact spread to the entire ICO market. In a press release, the SEC said the agency concluded that “the tokens issued and sold by a ‘virtual’ organization called ‘The DAO’ belong to securities and are therefore bound by federal securities laws.n
nAs the agency has no direct jurisdiction over the currency, the SEC will seek a reasonable conclusion if it wants to seek information on the issue of encrypted currency issuance in a landslide fallacies. But more importantly, the agency’s statement is another offense for the efforts of emerging companies to raise funds. As we have pointed out in a recent report, ICO is simply a new tool for providing funds for innovative start-up companies in an efficient way to achieve the content of Chapter 3 of the Venture Capital Act. The third chapter of the bill allows all companies with sales of less than $ 1 billion to raise up to $ 1 million in equity or debt. As described by Usha Rodrigues of the University of Georgia, it is intended as an “IPO entry”, thus easing “the way in which a regular company is listed.”n
nThe Securities and Exchange Commission classified the “initial digital tokens investment” as an effort to raise funds for start-ups. At the same time, regulators such as the SEC have not been adequately punished for the mistakes made by large banks. Then
nHowever, due to regulatory lag and the goal is too high, it is certain that the SEC makes the implementation of Chapter III of the Act is not satisfactory. Overall, since 2016, the third chapter of the bill produced a total of more than $ 50 million in committed capital. But we note that, by 2017, ICO issuers have raised more than $ 1 billion.n
nICO is a process in which companies raise money by issuing “tokens” – money created with innovative encryption technology that does not require a central bank to generate monetary units, but also Verify transaction history. (The network is the central bank.) With digital money and block-chain technology as a tool, ICO has characteristics similar to that of all-out, venture capital and IPO.n
nThe SEC’s move has shown that central banks, regulators and large financial institutions are still concerned about the decentralized nature of this emerging market and tools. Digital money and their underlying technology block chains pose a new threat to the dominance of more mainstream financial services entities. The SEC may raise a reasonable challenge to the classification of ICOs, but the potential negative impact of the report’s issuance of digital tokens on start-ups will only deepen the perception that regulators are resisting emerging financial technology (chain chains) with great potential, , Thus protecting its deep-rooted social and economic interests.n
nThe SEC’s apparent reluctance to hit the deep-rooted big companies will only deepen that view. Institutions that have contributed to major violations during and after the financial crisis have paid only a small amount of fines, and the sanctions are extremely slight compared to the size of the firm. Wells Fargo, for example, has been one of the big banks with civil reconciliation with the government; it has not faced any criminal action. And if the SEC is really concerned and designed to protect the public interest, Wells Fargo will immediately face serious charges because it is suspected of forging disclosure of documents and violating securities laws, and the scandal of the creation of 2 million false accounts by Wells Fargo.n
nIn many respects, the popularity of digital money, decentralized structures and new financing methods are due to the loss of trust in traditional institutions after the financial crisis, as well as the lack of meaningful (such as imprisonment) of traditional institutions, a reasonable and effective crisis Regulatory enforcement. Since the SEC failed to protect its investors in the last financial crisis, resulting in US $ 17 trillion in US citizens, the agency could be considered a lack of trustworthiness. People are looking for financing tools that they can trust.n
nIn the long run, I do not think the SEC’s attempt to conduct supervision will not work. The market will, as always, find ways to relieve these restrictions. Given the lack of SEC’s jurisdiction over money, many potential ICO issuers are redesigning their ICO distribution.n
nThe nature of the chain chain makes the technology (not the regulator) going to win in the long run. The SEC is best aware of this and takes the common sense, reasonable and meaningful safeguards to protect the public rather than financial institutions. Trying to kill ICO this new industry in the cradle is not the right way.n

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