In 2018, ICOs raised over $7.8 billion USD—up $1.6 billion from the year 2017. Most of these 2018 funds were raised in the first three months of the year. Cryptocurrencies have been on the decline ever since. Yesterday, the Securities and Exchange Commission (SEC) released their new guide to ICOs. This new SEC ICO guide seems oddly timed, considering the fundraising tactic has decreased dramatically.
Our guide to initial coin offerings: https://t.co/N1cfvEjmM6
— SEC_News (@SEC_News) February 10, 2019
SEC ICO Guide
The US regulator released the news of its new guide via Twitter and over its website. There is now a dedicated section on the SEC’s website that lists five aspects of ICOs the SEC considers “essential.” The regulator has also added a section for market professionals and investors.
It remains unknown at this time why it was announced just now, considering the content has existed on the site since March of 2018.
The main ICO guide page explains:
“Companies and individuals are increasingly considering initial coin offerings (ICOs) as a way to raise capital or participate in investment opportunities. While these digital assets and the technology behind them may present a new and efficient means for carrying out financial transactions, they also bring increased risk of fraud and manipulation because the markets for these assets are less regulated than traditional capital markets.”
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The five descriptive aspects the SEC lays out aren’t surprising, given they summarize the organization’s stance on the fundraising tactics from the get-go. The guide explains that ICOs are a security and need to be registered with the SEC regardless of how the issuer refers to it.
In the past, there have been strong debates when it comes to digital currencies being a security in the eyes of the US regulator. Now, the SEC only sees ICO tokens as securities and has left digital currency alone.
In terms of market capitalization, the ICO industry is now just a fraction of what it once was a year ago. While the new SEC ICO guide gives clear direction for investors on how the organization feels, it may be too little too late.
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