Blockchain CEOs respond to SEC’s declaration that ICOs may be securities
on Chernesky, investFeed CEO (Social trading platform dropping US equities for crypto)
We welcome it, and actually think it’s a step in the right direction for the industry. Before yesterday’s announcement, it was common knowledge that ICOs have been enveloped in a regulatory grey area, but we spent a lot of our resources on best-in-class legal counsel and compliance to ensure we conducted ours right. One of the most telling pieces in the SEC announcement was an acknowledgement that some ICOs are completely fair investments, and some are not. We fall into the former category. Just like any other opportunity, there are inherent risks involved, and ICOs are no different. The SEC is warning investors to be aware of the risks, and ensure they do their due diligence on the company conducting it, the structure of the token generation event, the team behind it, and the product roadmap
Perry Woodin, Node40 CEO (Blockchain accounting and governance firm)
“Breakthrough advancements in technology often give way to rapid acceleration of new business ideas. The number of businesses supporting blockchain applications have exploded over the past couple of years, and with them we’ve seen new tools for raising capital. The issues that crop up during these cycles of rapid business acceleration often lead to individuals taking a chance with compliance. As we have seen with blockchain, those taking a position that their actions fall into a legal grey area are often shocked to find that compliance is black or white. If you’re aiming for the middle ground, you will likely find yourself out of compliance and subject to existing, or yet to be defined regulations. The SEC’s report on ICOs was not a surprise. Many of the ICOs were aiming for that compliance grey area. They wanted their offerings to be considered “crowdfunding” even though they could not meet the requirements of the Regulation Crowdfunding exemption. Now we’ll see what happens as companies attempt to fit within the SEC’s guidelines.”
This is a major turning point. ICOs and other coin offerings that are primarily structured as investments will have to be registered with the Securities and Exchange Commission if they are marketed to U.S. investors. Issuers will have to choose between the expensive process of registering with U.S. authorities or foregoing to U.S. capital markets. Successful companies have gone down both these paths. But the era of quick ICOs in the United States based on an investment concept, and not based on a new functionality concept, is officially closed.
I predict some significant fallout for the companies that have conducted ICOs in the past six months that are structured similar to the DAO token incident. Many ICOs are out there that will now be viewed definitively as securities, and yet are unregistered. These companies will now need to register as securities, an expensive process that they may or may not be able to pay for, or they will risk being on the wrong end of an enforcement action.
valuewalk.com
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The ‘Wild West’ Crowdfunding Period May Be Coming to an End
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