On Tuesday, the SEC announced that tokens that are sold off in crowdfunding events known as Initial Coin Offerings (or ICOs) in ethereum may be considered securities in some circumstances, and are therefore subject to US securities law. Tokens are digital assets that investors may purchase during ICOs, and they usually have some sort of bespoke functionality—in some cases, voting rights or profit dividends—in the app the investor is buying into.
[...] As for which tokens constitute securities, the SEC concluded that the tokens people bought in 2016 to participate in the DAO—a crowd-directed investment fund that imploded after being hacked that same year—were securities. The SEC notes in its report on the DAO that token-holders purchased the tokens with the expectation of profit "derived from the managerial efforts of others," which qualified them as securities.
Since the people behind the DAO didn't register its token sale with the SEC, it was technically illegal, but the commission stated that it has decided not to bring charges against them.
Going forward, according to the SEC, companies that are issuing tokens as part of an ICO (if they are considered securities) need to register with the commission. This will force companies to comply with regulations that ask them to reveal their financial position and the identities of their management. The SEC also concluded that online exchanges where tokens are bought and traded may have to register as security exchanges.
[...] Needless to say, things are about to get very interesting on the lawless digital frontier.
Source: vice.com
(Score: 1) by jb on Friday July 28 2017, @06:12AM (3 children)
...to ensure that all future crypto currencies first spring into existence somewhere other than the USA...
...which in the end is a very good thing for everyone.
(Score: 1) by YeaWhatevs on Friday July 28 2017, @02:22PM
Well yes, that does seem the correct workaround. The tradeoff of not being governed by SEC rules is, well, not being governed by SEC rules. I like the part of the rules that says you have to publish your investment materials so that the investor knows your company is more than just a fart in the wind. The part where before your IPO you can't publicly (bulk) advertise and may only solicit "sophisticated investors" with $X to get in the door, not so much. This means you can't leverage the internet the way you might hope to, and it limits how much you can use your wallet to vote for the technologies. On the other hand, those rules were designed to help protect the public from unscrupulous and incompetent businesses as well as ponzi schemes that *ahem*, seem to be associated with digital coins all to often, so on balance it is probably the right set of rules.
(Score: 0) by Anonymous Coward on Friday July 28 2017, @05:34PM
I am pretty sure that the SEC merely said DAO are securities, the Etherium (currency) wasn't addressed as it is NOT a security.
Basically, they said, that investing Etherium in a company is no different than investing dollars in a company, and that "DAO tokens" are basically no different than a stock.
Personally, this seem completely acceptable, as in, this is the SEC asserting that their job includes securities sold off wall-street as well.
(Score: 0) by Anonymous Coward on Friday July 28 2017, @10:12PM
I am pretty sure all of the major banks are looking at crypto currency. They also do not see it as anything more than a secure ledger. The banks do not really care what type of cash you deal with. Just as long as you keep it with them. If you think you are safe with crypto currency you are also dreaming.
There are no real laws against making your own. There are laws saying what you can pay your taxes in.