US SEC seems constructive on ICOs yet again

The SEC’s regulation facilitates capital formation, which assists entrepreneurs launch businesses and companies’ prosperity. The Securities and Exchange Commission (SEC) cites that all Initial Coin Offerings (ICOs) should be regulated as securities but when asked if they will ban or regulate the market, an SEC commissioner made it clear he was not suggesting either option. Instead, the focus is on protecting investors from fraudulent investments.

The SEC’s regulation facilitates capital formation, which assists entrepreneurs launch businesses and companies’ prosperity. The Securities and Exchange Commission (SEC) cites that all Initial Coin Offerings (ICOs) should be regulated as securities but when asked if they will ban or regulate the market, an SEC commissioner made it clear he was not suggesting either option. Instead, the focus is on protecting investors from fraudulent investments.

In this perspective, the US SEC has made an announcement that the establishment of FinHub in an effort to foster greater communication and understanding with emerging technology start-ups, such as blockchain companies going through ICOs. While Ken Nguyen, CEO of Angel List-backed Republic, believes that this move will bring greater clarity in what constitutes in as a compliant ICO without compromising investor protection.Republic has so far been the only compliant way for retail non-accredited investors to back and invest in the blockchain projects that they love. 

Jay Clayton, chairman of the U.S. Securities and Exchange Commission (SEC), has shed some light on the benefits of initial coin offerings (ICOs) as a method to raise capital with a noteworthy caution.

Clayton said “I believe that ICOs can be effective ways for entrepreneurs and others to raise capital.”However, he claimed that securities rules must be adhered to wherever is appropriate.

He further added by saying that “the novel technological nature of an ICO does not change the fundamental point that, when a security is being offered, our securities laws must be followed”.

The SEC and its staff “have spent a significant amount of time” focusing on blockchain and cypto assets and that is a trend he expects to continue in the coming year.

Clayton continued: “A number of concerns have been raised regarding the digital assets and ICO markets, including that, as they are currently operating, there is substantially less investor protection than in the traditional equities and fixed income markets, with correspondingly greater opportunities for fraud and manipulation.”

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