The Securities and Exchange Commission has not said much about crypto companies issuing new tokens, usually called “ICO’s”, Initial Coin Offerings. The issue has remained silent. Now SEC provided a statement on May 23, saying they want ICO’s to be fair. They want cryptocurrency startups to protect their investors.
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A Reuters article quoted SEC officials, ‘Whether or not you are regulated by the SEC, you still have fiduciary duties to your investors,’ said Valerie Szczepanik, the head of the SEC’s distributed ledger group. “If you want this industry to flourish, protection of investors should be at the forefront.”
This commentary comes as more and more ICO’s are starting to crop up in the bitcoin space, and crypto lovers are calling some of these companies frauds or fakes, who are just trying to scam investors and customers.
Lack of Oversight and the Problem with New Tokens
Allegedly, many of these companies have caused alarm bells to sound off because they are not being regulated by any institution or organization. The SEC said just because a company may not be regulated, it does not mean their monetary responsibilities are negated. The Reuters announcement said,
These ICOs have raised red flags due to a lack of regulatory oversight. Some market participants say ICOs could be illegal because the companies are selling tokens that can be considered securities, which fall under the SEC’s jurisdiction.
In a humorous statement, Peter Van Valkenburgh, director of research at cryptocurrency advocacy group Coin Center, says that calling a new coin an “ICO’ is a bad idea anyway, because that sounds too close to the regulated “IPO.” In other words, it is not intelligent wording for these companies to use. It brings them unwanted regulatory attention.
The Reuters article also quoted him, ‘It’s like painting a target on yourself. Because, what does an organization like the SEC regulate? They regulate IPOs,” said Van Valkenburgh, referring to initial public offerings. ‘Why would you adopt the terminology of the regulator when you’re building a thing you hope they don’t regulate?’
What do you think about SEC getting involved in ICO’s? Is ICO an accurate name to describe new token generation? Let us know in the comments below.
Images via Shutterstock and carbontracker.org
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Source: News Bitcoin