We at EconoTimes find it necessary to shed some light on ICO regulations as over $8.8 billion has been invested via Initial Coin Offerings since the beginning of 2016.

On the back of an SEC’s press release where it states that the commission has “obtained a court order halting an ongoing fraud involving an initial coin offering (ICO) that raised as much as $21 million from investors in and outside the U.S.,” adding that the court also approved an emergency asset freeze and the appointment of a receiver for Titanium Blockchain Infrastructure Services Inc., the firm behind the alleged scheme.

While the issuer would need to have the offering “qualified” by the SEC, which meant filing a short form registration statement with the SEC and undergoing an SEC review process. And if the offering was successful, unlike Regulation D, an issuer would then have to file annual, semi-annual, and interim reports with the SEC, but with much lighter disclosure obligations than a “fully reporting” company.

But if the opinions of small business stakeholders on Main Street are any indicator, the Regulation A+ glass is only half full, at least according to the overwhelming consensus of participants in the SEC’s 2017 Annual Government-Small Business Forum.

The U.S. House of Representatives has recently passed the “Regulation A+ Improvement Act” which will allow for a substantial cap increase under which businesses of all sizes will be able to carry out securities offering while still being subject to Reg A+ guidelines.

The business entities in the US may have an alternative method of raising money via an ICO/token offering. One such method we emphasize is the use of Regulation A+, something conventionally used by MSME (micro-smaller-medium enterprises) type companies to IPO that’s been encouraged by cryptocurrency companies in the U.S. The trend of Reg A+ mechanism of capital raising is likely to grow upon the opening of this latest regulation. Some ICO’s have already been the beneficiaries of Reg A+ method for their offerings, such as Gab ICO, RideCoin ICO and WeDemand ICO and so on.

While this small legislative change could be conducive to reporting companies whose shares trade on the over-the-counter markets, such as The OTC Market, versus a national exchange such as NASDAQ or the NYSE.

Once the SEC implements this new law, a reporting company which trades on the OTC market will be able to utilize Regulation A+ to reach an unlimited number of non-accredited investors outside of a fully registered offering – and without being subject to state Blue Sky laws.

Prior to this change, OTC companies would not only be barred from using Regulation A+, but if they wanted to reach more than 35 non-accredited investors in an offering, they would have to register the offering with the SEC. And unlike their peers who are trading on a national exchange, even in a fully SEC-registered offering, a non-exchange listed company would still need to navigate the labyrinth of state Blue Sky laws – as current law only exempts exchange-listed companies from complying with state Blue Sky laws.

So by Congress passing this law, for the first time smaller reporting companies will not only have access to the Regulation A+ exempt offering process, allowing them to reach an unlimited number of non-accredited investors – without conducting a fully registered offering – they will also be able to do so and without complying with state Blue Sky laws – something they are still required to do in a fully registered offering. Courtesy: crowdfundinsider website

https://www.crowdfundinsider.com/2018/05/134223-sec-regulation-a-icos-and-small-business-capital-formation-for-whom-the-bells-toll/

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