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ICO Regulation: SEC Campaigning against ICOs and Crypto-Exchanges

We just passed an interesting week when it comes to cryptocurrency, ICOs, and Crypto-Exchanges. The U.S. regulator SEC made (again) clear that it regards tokens issued within ICOs as securities. Consequently, token issuers (i.e. the entity and/or person conduction and ICO) has to comply with the respective security laws and rules (read this recommended article on CoinDesk).

The SEC issued a large number of subpoenas to initial coin offering (ICO) issuers and to ICO advisers involved in token transactions that potentially did not comply with the federal securities laws. It is expected that the SEC will take a strong stand against illegitimate ICOs and its promoters.

Moreover, the agency made clear that it expects cryptocurrency exchanges to register if they trade and/or deal with tokens and coins that have to be regarded as securities.

The reason for the SEC campaigning against illegitimate ICOs, its promoters and crypto-exchanges is investors protection. Some industry experts expect that more than 10% of the funds raised from investors in ICOs has been stolen. Furthermore, it is expected that the vast majority of ICO promoters (projects, companies, and people) will not succeed and investors may lose their money. Up until March 2018 more than USD 6.5 Billion dollars have been raised via ICOs. A lot of money that’s at risk.

We expect that other regulators and agencies in other jurisdictions such as FCA (UK) or BaFin (Germany) will follow suit and clean the market with tough actions against illegitimate ICOs.

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