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Author Topic: Implications of SEC announcements re ICO.  (Read 376 times)
Lena_Storifier
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July 26, 2017, 03:04:56 PM
 #1

Hey,
what are your thoughts on the future of ICO regulations?
Here's a nice summary of various token rights and how recent SEC announcement can influence token economics:
https://medium.com/@StorifierCo/token-economy-4a38ad02a239
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July 31, 2017, 01:06:07 PM
 #2

I think it will help legitimize the market in the U.S.

Other governments may stay out of it, but in the U.S. taxes drive everything. If the local government feels they have an opportunity to tax individuals they will exploit that.

We're a U.S. company that will soon announce an ICO. We have one of the better lawyers in the country as counsel. Collectively we feel the note didn't hurt us, nor the industry as a whole.

IMO, there have to be some type of standards implemented to get mass adoption. My hope is this is a step in that direction.
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July 31, 2017, 02:45:38 PM
 #3

Well as usual the tax man is going to collect their tax....

It is kind of a blessing in disguise I suppose though, more protections for consumers isn't exactly a bad thing in that of itself. The consumer though should already realize many things about ICOs and their rate of success, but such is life.

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July 31, 2017, 02:59:19 PM
 #4

Well as usual the tax man is going to collect their tax....

It is kind of a blessing in disguise I suppose though, more protections for consumers isn't exactly a bad thing in that of itself. The consumer though should already realize many things about ICOs and their rate of success, but such is life.

I don't think it's good or bad, it is what it is... It's a double edged sword. If the regulations are correct, then all the scams will fade because people will be less prone to risk a big fine or even jail time.

But I don't think it's necessary. If you do your research, you will not get scammed. People need to do their research and know what the hell they are buying, not needing someone else to filter it for you. We are adults here.
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July 31, 2017, 03:15:02 PM
 #5

SEC regulations about ICO is necessary, because it is relate to the legality and usability of their tokens
it is the token’s functional (utility) role in a project’s ecosystem that largely determines the viability of that project as a decentralized distributed entity.

But, since SEC based in US, then they don't have the right to prohibit any investors or ICO projects from outside the State obviously.
So, he is right, everyone has to learn about the project and consider the risk before decide to put your money on.

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July 31, 2017, 03:19:55 PM
 #6

I agree too that the consumer needs to conduct their due diligence.

However, if I read a white paper and you read a white paper we would infer different things about the project. It may look great to me and look like a dud to you. That is where standards come in and will help the industry, as a whole.

Regardless, it's an exciting area and will continue to drive innovation.
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July 31, 2017, 03:58:33 PM
 #7

https://www.coindesk.com/legal-experts-warn-of-coming-crackdown-on-token-exchanges/

Basically, no one can't prevents ICO's from happening, i.e. sending Bitcoins and getting altcoins in exchange directly from ICO runners. But what regulators can do is to crackdown on exchanges that list ICO tokens, since they are effectively violating new laws that say that tokens are now securities and must be regulated. Storing coins on exchange was always a bad idea, but now it seems even worse.
This also brings a new question - what will regulators do to decentralized exchanges that can't be taken down so easily?
Edit: bonus question - are PoS coins securities?

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July 31, 2017, 05:00:55 PM
 #8

https://www.coindesk.com/legal-experts-warn-of-coming-crackdown-on-token-exchanges/

Basically, no one can't prevents ICO's from happening, i.e. sending Bitcoins and getting altcoins in exchange directly from ICO runners. But what regulators can do is to crackdown on exchanges that list ICO tokens, since they are effectively violating new laws that say that tokens are now securities and must be regulated. Storing coins on exchange was always a bad idea, but now it seems even worse.
This also brings a new question - what will regulators do to decentralized exchanges that can't be taken down so easily?

They can't do nothing about it. They are just going to try to get the US based ICOs, which means, everyone hosting ICOs that are doing under US jurisdiction will go to another country and run their ICOs (possibly scams) on other countries, then the US will have a hard time doing anything about it, unless they of course pretend to keep running the world just like they are demonstrating with the BTC-E incident.

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July 31, 2017, 05:27:51 PM
 #9

https://www.coindesk.com/legal-experts-warn-of-coming-crackdown-on-token-exchanges/

Basically, no one can't prevents ICO's from happening, i.e. sending Bitcoins and getting altcoins in exchange directly from ICO runners. But what regulators can do is to crackdown on exchanges that list ICO tokens, since they are effectively violating new laws that say that tokens are now securities and must be regulated. Storing coins on exchange was always a bad idea, but now it seems even worse.
This also brings a new question - what will regulators do to decentralized exchanges that can't be taken down so easily?

They can't do nothing about it. They are just going to try to get the US based ICOs, which means, everyone hosting ICOs that are doing under US jurisdiction will go to another country and run their ICOs (possibly scams) on other countries, then the US will have a hard time doing anything about it, unless they of course pretend to keep running the world just like they are demonstrating with the BTC-E incident.

Should the SEC decide to do a crackdown, they will go after the ICOs themselves, regardless of where they are traded. It also won't matter whether the ICOs are US based or not - as long the ICO accepts US investors (or fails to prevent US investors from taking part) they will fall under the jurisdiction of the SEC. It's kinda fucked up, really, but that's the way it is. Happened before with the likes of btct.co and bitfunder. I think at least btct.co was (officially) based in Central America, which didn't help squat.

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July 31, 2017, 05:54:22 PM
 #10

https://www.coindesk.com/legal-experts-warn-of-coming-crackdown-on-token-exchanges/

Basically, no one can't prevents ICO's from happening, i.e. sending Bitcoins and getting altcoins in exchange directly from ICO runners. But what regulators can do is to crackdown on exchanges that list ICO tokens, since they are effectively violating new laws that say that tokens are now securities and must be regulated. Storing coins on exchange was always a bad idea, but now it seems even worse.
This also brings a new question - what will regulators do to decentralized exchanges that can't be taken down so easily?

This is especially troubling. Are there any exchanges that actually have registered with the SEC? If someone like Bittrex got slammed by the SEC then it would deal a severe blow to many alts, some may never recover.

EDIT: seems like Bittrex is on top of this and compliant with SEC regs:

https://www.cryptoninjas.net/2017/07/29/bittrex-recent-sec-digital-asset-ico-investigative-report/

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September 30, 2017, 04:01:04 PM
 #11

Most professional teams aren’t phased by he release because most who have been in the space for a while were always aware of such things as the Howey test which is used to ascertain if a financial instrument is a security of not (for an introduction to the Howey Test, please see this article by Findlaw What Is the Howey Test? - FindLaw. Most professional teams are calling themselves Token Sales and not ICOs to get away from any hints of being a secuity. The SEC and other global registries have limited budgets. Our view is that they HAVE to go after the really bad actors - those that have a blatant scam in place. Equally, more likely than not they will go after those that have raised substantial funds - there is a honey pot for them to get their teeth into. Those that have done the right thing generally will probably fall beneath the radar (although no guarantees of course) . The challenge is that most regulators have 7 years to come after you … and in different countries. In theory, the SEC could extradite someone from overseas of they have done something bad (like defrauding) to a US citizen… they have draconian powers.
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October 01, 2017, 04:04:19 AM
 #12

Security refers to a negotiable and fungible financial instrument having a specific monetary value. It culminates to ownership rights via stock in publicly traded company or having a creditor relationship with corporation or government body or ownership rights in the form of option. Thus only a very ICO’s will make it to the security category with the above mentioned specifications to adhere to. However SEC will be in a place to take the ultimate call regarding setting of criteria.
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October 01, 2017, 04:25:52 AM
 #13


This is especially troubling. Are there any exchanges that actually have registered with the SEC? If someone like Bittrex got slammed by the SEC then it would deal a severe blow to many alts, some may never recover.

EDIT: seems like Bittrex is on top of this and compliant with SEC regs:

https://www.cryptoninjas.net/2017/07/29/bittrex-recent-sec-digital-asset-ico-investigative-report/

Being an exchange that has high volume of traders, this is good news because many traders are putting their money to this exchange and since SEC are doing something to crackdown those exchnages that are non-compliant, this would leave the traders who use this exchange a peace of mind. I use this exchange as well and knowing that they already act and do the necessary things to be compliant then I would continue to use this exchange.

   
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