Bitcoin Forum

Too Easy? Critics Take Aim at Ethereum Token Standard Amid ICO Boom

It's hard not to be taken aback by the amount of money consumers have been throwing at initial coin offerings (ICOs) lately.

The new fundraising model allows developers to sell digital 'tokens' to raise money for decentralized projects. Two recent events highlight why there may be cause for concern.

Earlier this month, web browser startup Brave made $35m in seconds selling its basic attention token (BAT). And, soon after, a relative unknown called Bancor pulled in $150m in hours – the largest ICO in history – despite claims about possibly sketchy code underlying the project.

Like the majority of recent ICOs, these projects were built on the ethereum blockchain. And what they have in common is ERC-20 – a standard that allows wallets, exchanges and other smart contracts to interface with a variety of tokens in a common way.

Yet, while standards exist for good reason, when combined with a lack of regulation in the space, some believe ERC-20 may be making it too easy for unscrupulous projects to get into the game.

http://www.coindesk.com/too-easy-critics-take-aim-at-ethereum-token-standard-amid-ico-boom/

Just wait until the Securities and Exchange Commission starts sniffing around.

You see, a lot of these offerings didn't discriminate - they were openly offered to U.S. Citizens which violates securities laws for operating what is essentially an offering of an unlicensed security. Similar enough, that is, to make the SEC try to rule on jurisdiction and potential damages to the organizations issuing these contracts.

And before you say the SEC doesn't have the reach -- recall that they even caught up with ex-pat Erik Voorhees when he did a similar style token offering for a business he was running.

It will take some time, as they are rather ponderous when gathering information, but once that stone gets rolling I'd be sure I wasn't sitting under the wall of rock coming your way.