SEC Regulates “Initial Coin Offerings” Virtual Tokens Subject To Securities Laws

By Aaron Kesel

The Securities and Exchange Commission (SEC) has issued a press release cautioning market participants that offer “Initial Coin Offerings” or “Token Sales” that these “virtual” organizations are subject to the requirements of federal securities laws. So what does this mean for Bitcoin and other altcoins that were primarily operated inside U.S. jurisdiction?

“The Report confirms that issuers of distributed ledger or blockchain technology-based securities must register offers and sales of such securities unless a valid exemption applies. Those participating in unregistered offerings also may be liable for violations of the securities laws,” the report said.

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The inquiry was due to the SEC’s Enforcement Division launched to determine whether The DAO and associated entities and individuals violated federal securities laws with unregistered offers and sales of DAO Tokens in exchange for the “Ether,” virtual coin.

So what does this mean for you the investor into these altcoins?

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Firstly, it means your personal right to participate in free markets of ICOs was just shat on. Secondly, it conveys that several dozen blockchain projects that raise capital through the blockchain will probably move out of the USA because of the SEC ruling on compliance with federal securities effectively outsourcing cryptocurrency jobs overseas.

Lastly, if you now surpass over $1 billion in net worth, you will have to register the tokens as securities; if you don’t you “may be liable for violations of the securities laws. The purpose of the registration “is to ensure that investors are sold investments that include all the proper disclosures and are subject to regulatory scrutiny for investors’ protection.”

Zerohedge reported that the SEC’s decision to “register” ICOs may have a similar effect to when the SEC denied to allow a Bitcoin ETF, which they note “initially sent the price of bitcoin tumbling but then promptly reversed, and pushed it back to all time highs.”

While there is a negative connotation to the SEC’s decision, Zerohedge further expresses that it may be a “blessing in disguise” which will allow for the “entrance of major banks to use it as an alternative to IPOs.” That could potentially “curb the proliferation of ponzi, pyramid and other get rich quick schemes which in many cases are beyond borderline criminal.”

All in all this will make investing harder and push some investors away from using the USA as a haven for their projects but may be a brighter future in the long run by forcing the more serious and credible coin offerings into the open and ousting others which will leave just a handful of cryptocurrencies that are actually worth something. This likely will ultimately end up benefiting the blockchain which has been flooded with ideas for cryptocurrencies rather than working on the other established technologies. Additionally, regulation will lead to a sturdier blockchain ecosystem by limiting both losses and gains.

It will also begin to centralize cryptocurrencies under one umbrella of enforcement; which, whether you like it or not, will allow for future use of cryptos as eligible collateral within capital markets’ transactions, something Bank of America said in a subsequent report is “critical to truly unleash the crypto community to its next evolutionary step in replacing fiat.”

Wall St. tested the use of digital currency in a secret meeting during the middle of 2016 in April, so we are almost towards that “evolutionary step in replacing fiat” with a few more hurdles to face before we see cryptocurrency used globally.

Aaron Kesel writes for Activist Post. Follow us at Twitter and Steemit. This article is Creative Commons and can be republished in full with attribution.

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2 Comments on "SEC Regulates “Initial Coin Offerings” Virtual Tokens Subject To Securities Laws"

  1. Just as firearms are important tools for free people, so too are strong encryption and truly anonymous digital currencies. That is why the psychopath control-freaks are out to ban them all.

    Recall that neither Bitcoin nor Etherum are inherently anonymous. Consider DASH and Monero, cryptocurrencies that were designed from the ground up to be anonymous.

    P.S. Don’t make any “meatspace” errors that compromise your privacy.

  2. Thank you Aaron Kesel for your insightful article. Thanks for writing about the things we should be aware of and helping to expose corruption. I hope you don’t become like Vin Armani who thinks he is so smart but instead he has an agenda of self/paid interests.
    To quote a fellow by the avatar name of Rusty Irons on yt, “Currency is and will always be controlled by government . Bitcoin had a good start but any type of currency will ultimately end up in Rockefellers hands” , to which I believe this statement to be true. The govt does not want people to live freely in free markets because they want control. I believe govts are organizations that have its own self interests. Govts are actually the biggest businesses in their region of the world control by people who have sold their souls to the devil to have their temporary fame/riches but Judgement Day is coming and it will be those whom are last and the humble/meek who shall inherit.

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