ICO News: Upcoming ICOs Build a Bridge to Regulators

on Oct 13, 2017

Upcoming ICOs in the United States are making the job of regulators a little easier by willingly registering with the watchdog agency ahead of their token sales. Nearly a dozen issuers who collectively have raised USD 350 million via ICOs registered those deals with the SEC, as per CNBC data, either placing a target on their back or building a bridge with regulators. 

In many upcoming ICO white papers, issuers refer to the digital coin as a utility token in an effort to take regulatory eyes away from the deal. And before the financial crisis and the Dodd-Frank Wall Street policy, even hedge fund managers weren’t registering their funds. For ICO issuers to do so is perhaps a bit of self-preservation but it’s also an olive branch to a regulatory body that unfortunately has been given reason to be suspicious of deals.

“The idea is to be proactive and engage regulators to foster goodwill,” according to Meltem Demirors, director at the Digital Currency Group, quoted in CNBC.

Issuers such as eSports betting startup Unikrn registered their upcoming ICOs with the SEC using the Form D filing. This public filing discloses information tied to fundraising and includes fields with contact details for the management team. As for the security type, the SEC has not gotten around to adding “digital token” just yet.

In Unikrn’s case, the issuer checked the “other” box and added “simple agreement for future tokens.”  According to the filing, Bermuda-domiciled Unikrn sold USD 16 million worth of tokens with nearly USD 4 million left to be sold. 

Upcoming ICOs could use all the regulatory goodwill they can muster, and it has yet to be seen if the movement will play into the regulatory framework that the SEC is creating. The US agency has thus far unleashed a cryptocurrency task force and intercepted and filed charges against at least a couple of deals in the past few weeks that raised suspicion. But formal regulation has yet to be written.