The U.S. securities regulators' control of cryptocurrencies has not dissipated, but intensified - The Securities and Exchange Commission (SEC) tightened its fraud for the first time in the issue of tokens (ICO), according to The Wall Street Journal, Has issued a large number of subpoenas to industry players suspected of violating the securities law because the SEC has been worried for months that some ICOs are raising funds for ungoverned businesses.
The Wall Street Journal reported that the SEC issued a subpoena to get information from technology companies and consultants who are involved in the cryptocurrency market.
Most ICOs are securities
According to CoinDesk, the ICO market has been booming for nearly a year, with the SEC worrying that in many cases some smaller investors have not adequately studied the risks associated with the ICO and, in addition, the Wall Street Journal quoted sources as saying , The SEC is investigating the structure of the ICO, in part because the ICO does not need to follow as many provisions as the IPO.
After the news came out, major cryptocurrencies, including bitcoin, etheric and ripple, crashed.
SEC spokesman Judith Burns did not immediately respond to a call for comment, but the Daily Economic News reporter noted that SEC chairman Jay Clayton has been raising funds for the ICO Clayton has also said on many occasions that the vast majority of ICOs should register with the SEC because these cryptocurrencies traded on the secondary market just like any other SEC-regulated securities, but the ICO is under SEC regulation In an interview in January this year, Clayton promised that "if the ICO company does not change its way of doing things," more will be sanctioned.
In addition, in a speech to the U.S. Senate in early February, Clayton also said that most of the ICOs are portfolio securities. Clayton also said at the time whether the type of encrypted assets under the current currency trading framework of the SEC can be regulated attention.
In his speech to the Senate, Clayton said, "Investors are entitled to the protection of state and federal securities laws when they participate in securities transactions, and this is true of investors involved in ICOs. In addition, ICO financing Both the parties and the market participants must abide by these laws and we are willing to discuss with Congress and other countries whether there is a need to strengthen the federal government regulation of cryptocurrency trading platform.But we also support the regulatory and policy aspects of the promotion for the ICO And greater transparency in the area of cryptocurrencies. '
"Many ICOs are unlawful and the ICO companies do not comply with the securities law, and some say this is because the securities laws do not explicitly state the ICO, and we do not think so." Clayton The Senate added:
How to manage is not clear
The Daily Economic News reporter noticed that the ICO has been a controversial fund-raising model ever since its inception and that securities regulators have rattled the ICO numerous times before the SEC warned that the issue of tokens The company's practice of categorizing cryptocurrencies as 'functional, utility' does not preclude the regulation of federal securities laws.
But beyond the SEC, it is unclear how ICO and cryptocurrency will be effectively regulated, and for now the cryptocurrency trading platform is not within the purview of federal agencies such as the Commodity Futures Trading Commission (CFTC) Conversely, these ICO-financed companies are licensed and regulated at the state level and, while the SEC is tightening its regulation of ICOs, the ICO's funding model is not in line with the regulatory framework for stock IPOs Inside.
In the popular world, a company sells digital currencies that can eventually be redeemed for goods and services during ICO. ICOs allow companies to get millions of dollars from investors, for example, a real-time messaging application called Telegram Program operators are trying to raise 1.2 billion U.S. dollars by issuing tokens.
The SEC has already made a number of cases involving the ICO, including allegations against a Texas-based company in January of this year, claiming that former Boxing Champion Evander Holyfield (World Class Champion ) Successfully raised $ 600 million as a celebrity endorsement, the SEC said the company, known as AriseBank, was involved in illegal fundraising from investors without filing with regulators.
The Daily Economic News reporter also noted that in the past year, the rise of cryptocurrencies and ICOs have caused the prices of major digital currencies such as Bitcoin and Ether to skyrocket, according to Autonomous NEXT, a financial technology analysis provider, In January 2018, industry players raised a total of $ 1.5 billion through ICO, compared with more than $ 6.5 billion for the full year of 2017.