SEC Issues Investigative Report Concluding DAO Tokens, a Digital Asset, Were Sec

[williamuk]

About time I think. These ICOs were giving the whole industry a bad name

https://www.sec.gov/news/press-release/2017-131

Press release
SEC Issues Investigative Report Concluding DAO Tokens, a Digital Asset, Were Securities
U.S. Securities Laws May Apply to Offers, Sales, and Trading of Interests in Virtual Organizations

FOR IMMEDIATE RELEASE
2017-131
Washington D.C., July 25, 2017—
The Securities and Exchange Commission issued an investigative report today cautioning market participants that offers and sales of digital assets by "virtual" organizations are subject to the requirements of the federal securities laws. Such offers and sales, conducted by organizations using distributed ledger or blockchain technology, have been referred to, among other things, as "Initial Coin Offerings" or "Token Sales." Whether a particular investment transaction involves the offer or sale of a security – regardless of the terminology or technology used – will depend on the facts and circumstances, including the economic realities of the transaction.

The SEC's Report of Investigation found that tokens offered and sold by a "virtual" organization known as "The DAO" were securities and therefore subject to the federal securities laws. 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. Additionally, securities exchanges providing for trading in these securities must register unless they are exempt. The purpose of the registration provisions of the federal securities laws is to ensure that investors are sold investments that include all the proper disclosures and are subject to regulatory scrutiny for investors' protection.

"The SEC is studying the effects of distributed ledger and other innovative technologies and encourages market participants to engage with us," said SEC Chairman Jay Clayton. "We seek to foster innovative and beneficial ways to raise capital, while ensuring – first and foremost – that investors and our markets are protected."

More at the link...

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[The_Dark_Knight]

I tried to read that legal verbiage but I suppose it all comes down to this, the US is going to regulate the ICO market and in response those that release ICOs will probably forbid american citizens from participating in their ICOs anymore, am I right?

[chaoscoinz]

I tried to read that legal verbiage but I suppose it all comes down to this, the US is going to regulate the ICO market and in response those that release ICOs will probably forbid american citizens from participating in their ICOs anymore, am I right?

Americans should have never participated (due to legal uncertainties), but these are uncharted waters, the SEC knew about the ICO's for a while, but continued to observe them from afar, until deciding to weigh their foot down. This is fairly new technology, so their giving us some leg room to maneuver.
    If you interfere with innovation, you kill the creativity. Some of those regulators are cheering us on. This is the digital gold rush. Anything can happen. Regulation will be slowly guided, slowly conditioned, one degree at a time(let he who has ear's to hear, hear!). If things get too out of control, they will wave the ban hammer quickly. I'm sure the regulators are profiting from these innovations as well. It's like watching a young child express their creativity. Too much interference will only hinder the technology. After all, theres monrley to be made by everyone!

Cheers!

[kolesozw]

About time I think. These ICOs were giving the whole industry a bad name

https://www.sec.gov/news/press-release/2017-131

Press release
SEC Issues Investigative Report Concluding DAO Tokens, a Digital Asset, Were Securities
U.S. Securities Laws May Apply to Offers, Sales, and Trading of Interests in Virtual Organizations

FOR IMMEDIATE RELEASE
2017-131
Washington D.C., July 25, 2017—
The Securities and Exchange Commission issued an investigative report today cautioning market participants that offers and sales of digital assets by "virtual" organizations are subject to the requirements of the federal securities laws. Such offers and sales, conducted by organizations using distributed ledger or blockchain technology, have been referred to, among other things, as "Initial Coin Offerings" or "Token Sales." Whether a particular investment transaction involves the offer or sale of a security – regardless of the terminology or technology used – will depend on the facts and circumstances, including the economic realities of the transaction.

The SEC's Report of Investigation found that tokens offered and sold by a "virtual" organization known as "The DAO" were securities and therefore subject to the federal securities laws. 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. Additionally, securities exchanges providing for trading in these securities must register unless they are exempt. The purpose of the registration provisions of the federal securities laws is to ensure that investors are sold investments that include all the proper disclosures and are subject to regulatory scrutiny for investors' protection.

"The SEC is studying the effects of distributed ledger and other innovative technologies and encourages market participants to engage with us," said SEC Chairman Jay Clayton. "We seek to foster innovative and beneficial ways to raise capital, while ensuring – first and foremost – that investors and our markets are protected."

More at the link...

This is why most of the ICOs doesn't allow American Citizens to invest in.
I'm much more curious how the US authorities would treat a ICO founder who lands in US? Any information? Because I have some memories for arrested owners of poker companies after the Black Friday.

[Yuhee]

About time I think. These ICOs were giving the whole industry a bad name

https://www.sec.gov/news/press-release/2017-131

Press release
SEC Issues Investigative Report Concluding DAO Tokens, a Digital Asset, Were Securities
U.S. Securities Laws May Apply to Offers, Sales, and Trading of Interests in Virtual Organizations

FOR IMMEDIATE RELEASE
2017-131
Washington D.C., July 25, 2017—
The Securities and Exchange Commission issued an investigative report today cautioning market participants that offers and sales of digital assets by "virtual" organizations are subject to the requirements of the federal securities laws. Such offers and sales, conducted by organizations using distributed ledger or blockchain technology, have been referred to, among other things, as "Initial Coin Offerings" or "Token Sales." Whether a particular investment transaction involves the offer or sale of a security – regardless of the terminology or technology used – will depend on the facts and circumstances, including the economic realities of the transaction.

The SEC's Report of Investigation found that tokens offered and sold by a "virtual" organization known as "The DAO" were securities and therefore subject to the federal securities laws. 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. Additionally, securities exchanges providing for trading in these securities must register unless they are exempt. The purpose of the registration provisions of the federal securities laws is to ensure that investors are sold investments that include all the proper disclosures and are subject to regulatory scrutiny for investors' protection.

"The SEC is studying the effects of distributed ledger and other innovative technologies and encourages market participants to engage with us," said SEC Chairman Jay Clayton. "We seek to foster innovative and beneficial ways to raise capital, while ensuring – first and foremost – that investors and our markets are protected."

More at the link...

This is why most of the ICOs doesn't allow American Citizens to invest in.
I'm much more curious how the US authorities would treat a ICO founder who lands in US? Any information? Because I have some memories for arrested owners of poker companies after the Black Friday.

If they authorities could accumulate enough evidence of those law subject then they would be arrestes. And although there are laws on internet schemes,  i think the legislatine need to pass some laws or agree on some bills that are directed to these kinds of ico projects. Because in some ways these project can run around the law even if they obviously broken some of the security laws.

[BillyBobZorton]

I never entered into any ICO's, it always seemed very dodgy to me. I regret not getting on Stratis, I could be rich as hell right now and retired tho... sometimes you have to get in the mud and take uncomfortable/uneasy routes if you want to get rich, and getting into of these ICO's could have been it. I doubt that you'll have any problems with your gains. If you sell them for BTC then for fiat if you want to cash out and report the gains it should be ok, unless they make a law that says all gains from ICO's are invalid but that seems insane to me. ETH itself is an ICO..

[iamTom123]

I tried to read that legal verbiage but I suppose it all comes down to this, the US is going to regulate the ICO market and in response those that release ICOs will probably forbid american citizens from participating in their ICOs anymore, am I right?

Most probably, this will be the immediate effect of this report coming from no less than SEC of USA. Now, I think, many of the ICOs of recent weeks have already closed their door of participation from those living in USA and USA citizens wherever they might be based on. This stand from SEC is already anticipated months ago and this is not quite surprising. In fact, what is surprising is that it took SEC some time to release its official stand on ICO.

There are good ICOs and there can be bad ICOs and since many of the potential investors are not equip and even not qualified to do their own due diligence, it is now going to be regulated by the government before any organization or project can open its ICO to the public.

But this is going to be effective only in the land of USA and will not cover those based in other countries. So the best way to avoid SEC is of course to never let any American get in his way to your ICO.