How does SEC handle ICO?


runaway commentary: Although the SEC has issued a lot of warnings against the ICO, but also handled some cases, but the agency has not yet announced the generally applicable regulatory measures, guidance in this area does not seem clear. However, the attitude of the SEC has always been very important to the ICO. The survival of this new model is one of the focuses of insiders. This article examines the SEC’s possible actions on the issue and, overall, the SEC does not appear to completely obliterate the ICO.n
Translation: Inan
The U.S. Securities and Exchange Commission has just issued another warning to the ICO, but the boundaries between functional tokens and securities tokens remain vague. The following are five related actions that the SEC may take within the next six months.n
SEC Chairman Jay Clayton said, “I have not seen which ICO did not meet the securities standards.” This is true, but is the chairman of the fair use of standards to measure it?n
Beanie Babies, baseball cards and virtual goods in video games all share the same security features, but are they regulated?n
Although I would like to condemn the hypocrisy of the SEC, I found it displaying patience and reason in this process, unlike other government agencies.n
In a SEC survey released this month, Clayton explores how to distinguish whether a token is a security:n
n”Specifically, we come to the conclusion that tokens issuance represents the capital investment in ordinary businesses and investors want to make profits.”n
nBy the way, the assertion is not the first. The Supreme Court made a similar statement 71 years ago.n
However, the views of 71 years ago still apply to today’s world?n

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Golf Club member and CryptoKittiesn
If you’re not focused on CryptoKitties, you’re missing the Pokemon in the cryptocurrency community. CryptoKitties is a game to get real money by raising, collecting and selling digital cats. Last year, Pokemon rocked the field of augmented reality and CryptoKitties made a breakthrough in cryptocurrency.n
Players of CryptoKitties have spent more than $ 10 million on these digital meow and some have sold for $ 100,000. They satisfy all the “security features”, so why did not the SEC manage it? The owner of the digital meow looks “owned”, but it is not. Axiom Zen, the owner of the site that really owns them, sets the market rules and controls it. So if Axiom continues to provide services to increase the value of CryptoKitty, does not violate the SEC’s rules? This situation is full of contradictions.n
Let’s see how it relates to golf club membership. One of the allegations the Munchee ICO made before the SEC was that the token was not immediately available. So what about golf membership? This membership is often sold to fund new golf courses, and most can be re-sold before the grand opening of the golf course. In addition, the owner of the membership does not own or control the golf course. So why the SEC did not respond to this situation?n

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The SEC may take 5 actions against the ICOn
These questions are not easy to answer, but reviewing several SEC documents and some Clayton statements suggests that the SEC may take the next five actions in the next six months.n
n1. The SEC may accept the ICO as a legitimate means of fund-raising. I know there’s a lot going on in the crypto community about banning legitimate ICOs, but I do not think it will happen. Clayton’s comments reinforce my belief that he said:n
“The ICO can be implemented without triggering the SEC registration requirement. For example, Regulation D proposes that funds raised for the manufacture of a physical product may be registered without registration, and the ICO as a security may design a reference to this and thereby exempt from registration.”n
nn2. The SEC may suspend hundreds of ICOs, including those that have taken place, are in progress, and are in preparation. Although it will not be a raid, I suspect the SEC will issue hundreds of such letters within the next six months.n
nn3. The SEC may update the “Howey Test” to guide future ICOs and categorize them clearly. Clayton gave several hints on this. In a recent related speech, he said:n
“In providing advice, designing products and conducting transactions for clients, market participants and their advisors should carefully consider our laws, regulations and guidelines, as well as our securities law framework, which has enabled us to respond to new developments for over 80 years. I also encourage market participants and their advisors to communicate with SEC staff to conduct analysis under securities laws. “n
nn4. The SEC may severely punish companies that actively promote the future value of functional tokens. If you are thinking about conducting an ICO, an insurance solution is to send an email to FinTech@sec.gov for guidance.n
nn5. The SEC may penalize or close the most troubled platforms, economy companies and trading companies and provide guidance to seemingly honest agencies. Clayton has warned against this behavior:n
“Likewise, I also warn those who affect or facilitate the trading of these products through operating systems and platforms that they may run unregistered exchanges or economic trading companies in violation of the Securities Exchange Act of 1934.”n
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to sum up n
To date, the SEC has played an important positive role in helping manage this complexity. But it should not be too zealous to limit the behavior of this developing market. From Clayton’s point of view of the matter, the SEC seems to support this:n
n”We are committed to capital formation. Encrypting money and the technology on which ICO is based may prove to be disruptive, transformative, and efficient, and I believe that the development of financial technology will help to promote capital formation and help organizations Investors and ordinary investors provide promising investment opportunities. “n
nIn short, the SEC seems to be changing and is intervening in the protection of ordinary investors. Driven by inexperienced investors, the ICO is approaching the brink of danger similar to the Internet bubble. If the SEC can provide clear guidance and eliminate scams, Wall Street and venture capitalists will have a healthy new investment choice.n

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