Reuters: SEC said digital currency sales need to be regulated


nnnAccording to Reuters, the Securities and Exchange Commission (SEC) is currently investigating increasingly hot ICOs that the tokens should be registered as a kind of securities and regulated by traditional securities trading rules. The SEC’s attitude warns many companies that intend to carry out ICO, although it may inhibit market activity, but is conducive to standardize the market and strengthen market integrity.n
nnTranslated by: Inan
nWall Street’s main regulator said on Tuesday that initial tokens (ICO) – a means of raising funds for block-chain technology companies – should comply with security regulations in traditional securities sales.n
nICO has become the source of wealth for digital money entrepreneurs, allowing them to quickly raise funds without the need for regulation by creating and selling digital “tokens”.n
nBut the Securities and Exchange Commission (SEC) has announced that tokens can be regarded as securities, so they may also need to be registered unless exemption is granted.n
n”The innovative technology behind these virtual deals does not separate the securities and trading platforms from the regulatory framework that protects investors and market integrity,” said Stephanie Avakian, co-director of SEC law enforcement.n
nThe decision reminds the chain chain companies that they can not ignore investor protection and may make some companies more cautious about selling through the tokens in the United States.n
nAccording to data collected by Reuters for digital currency research firm Smith Crown, as of mid-July, technology companies have raised about $ 1.1 billion in funding this year through 89 tokens, which is 10 times the 2016 annual financing.n
nAccording to the website tokendat.io, which tracks the tokens, only 110 ICOs are coming soon this year.n
n”This is a warning for many ICOs, and I think it will definitely hit America ‘s activities,” said Preston Byrne, a technology lawyer specializing in virtual currency.n
nSome ICOs have been criticized because they do not accurately disclose the distribution of tokens, such as how much coin the founder will hold, or whether it is restricted.n
nAs many tokens are traded on the virtual currency exchange, theoretically, people who hold a lot of tokens have the ability to control prices.n
nCritics also warned that the project often lacks a realistic business plan or is led by someone who does not have enough experience.n
nSEC’s decision was disclosed in the investigation report on the organization of “DAO”. DAO was created in April 2016 by a company called Slock.it.n
nBlock chains are online transaction books maintained by computer networks that emerge as a technology that supports digital money (such as Bitcoin).n
nDAO is designed as a decentralized model, and anyone can invest in the etherfront tokens to become a voting member of the organization’s equity. Ether is also a digital currency.n
nAlthough as of the end of May last year, DAO raised 150 million US dollars of funds, but then the value of 60 million US dollars tokens were an anonymous hacker stolen, transferred to another account.n
nThe SEC said in its report that after investigation, it was decided not to bring a civil action against DAO, but the case would be a warning to the market.n

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