Article:
https://blog.polymath.network/s-e-c-signals-open-approach-to-icos-while-advising-investor-caution-113129eab25dInitial Coin Offerings (ICOs) have raised more than $3 billion since 2013. In return for funds, generally bitcoin or ether, issuing entities often return a ‘utility’ token, which represents a software license or good — not a security. Regulators seem to be taking a pragmatic approach to this phenomenon.
“We at the SEC are committed to promoting capital formation,” writes SEC Chairman Jay Clayton in a press release issued December 11. “The technology on which cryptocurrencies and ICOs are based may prove to be disruptive, transformative and efficiency enhancing. I am confident that developments in fintech will help facilitate capital formation and provide promising investment opportunities for institutional and Main Street investors alike.”
As well as promoting capital formation, the role of the S.E.C. is to protect investors and to maintain fair markets. The S.E.C. is correct to advise token investors to be cautious and to perform adequate due diligence. And, overall, the industry should be encouraged that the regulatory body seems to be taking an open approach to ICOs.
As the U.S. Securities and Exchange Commission (SEC) and regulators worldwide begin to better understand blockchain technology, I foresee more regulations, clarity and oversight of ICOs in the near future. Regulators have already enforced against certain fraudulent ICOs. Those tokens which masquerade as utility tokens, but have no true or clear utility, will continue to face increasing scrutiny, as well.
Polymath: For all your Security Token needs
I believe that within five years 80–95% of crypto-assets will be considered securities, representing ownership or an equity stake in a company or fund.
At present, less than 1% of the total crypto market cap (over $400 billion) is comprised of self-identified securities tokens. Blockchain Capital’s $10 million token offering from April 2017 is one example of a self-identified securities token that aimed to comply with the traditional regulatory process.
I co-founded Polymath to help create an interface between financial securities and the blockchain, simplifying the process for issuers to overcome the complex technical and legal challenges of a successful token launch.
The platform makes possible a decentralized marketplace where issuers enjoy access to a group of pre-existing KYC-verified participants who are ready to invest.
Investors come to the Polymath platform, go through a verification process, and can thereafter participate in multiple offerings. Our native ERC20 Standard token, POLY, incentivizes use of the network; that is, to participate as an issuer or investor, one must use the POLY token to access the network.
The Polymath thesis is that over the next few years, stocks and share certificates will migrate from transfer agents and clearinghouses to the blockchain.
NASDAQ, the Bank of Canada, and Bank of England have spoken on how blockchains and distributed ledgers might transform the securities industry, and Bank of America just won a patent for a crypto-exchange system.
We have all bore witness to how Ethereum created a protocol to facilitate the launching of utility tokens. Polymath aims to have a similar impact by bridging the financial securities and blockchain worlds.
Are you interested in launching a token sale? Polymath is a one-stop shop for financial securities tokens launching in Q4 2017. You can find out even more about Polymath at their website and join the Telegram community to stay informed of updates and announcements.
The Polymath team
Chris Housser worked at Bennett Best Burn LLP in downtown Toronto for nearly half a decade. His practice areas included commercial litigation, securities, and more.
As a Member of the Law Society of Upper Canada, the Canadian Bar Association, and the Ontario Bar Association, he argued and attended motions, settlement conferences and trials in Ontario Superior Court of Justice and the Small Claims Court. In 2017, he co-founded Polymath.
