US SEC works on guidance for initial coin offerings

on Feb 11, 2019

The US Securities and Exchange Commission (SEC) plans to provide regulatory guidance regarding initial coin offerings (ICOs), industry website Coindesk has reported.

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During a speech at the University of Missouri School of Law on Friday, SEC commissioner Hester Peirce revealed that the regulator was working on “supplemental guidance” to help projects determine “whether their crypto-fundraising efforts fall under the securities laws”. Pierce acknowledged that the current method for determining whether something is a security might not be enough in some token sale cases. She pointed to how capital raised from decentralised token sales might not be owned or controlled by a particular entity, whereas traditional securities are controlled by issuers or promoters.

With regards to the existing method, dubbed the Howey test, Peirce also said that its application could be “overly broad”.

Speaking more broadly on the subject of cryptocurrency regulation, Pierce said that “ambiguity is not all bad”, arguing that the fact that the watchdog had been slow to bring regulatory oversight might allow more freedom for blockchain technology to grow and projects to mature. She also said that the commission was evaluating the need for new rules to be developed to regulate the sector.

“If we act appropriately, we can enable innovation on this new frontier to proceed without compromising the objectives of our securities laws – protecting investors, facilitating capital formation, and ensuring fair, orderly, and efficient markets,” Pierce said, as quoted by Coindesk.

Pierce also said that the SEC could sometimes be impulsive in its handling of digital currency projects and offerings.

“We owe it to investors to be careful, but we also owe it to them not to define their investment universe with our preferences.”


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