Altcoin News: ICO Regulation-Kik Blows up a Major Attack on SEC
January 28th, 2019 by Marko Vidrih on ALTCOIN MAGAZINE
The US Securities and Exchange Commission (SEC) has been targeting Initial Coin Offerings (ICOs) for quite some time and wants to regulate them like ordinary securities. Much to the chagrin of the crypto-industry, which feels constrained by it. Kik, the company behind the messenger app of the same name, is now reaching for a major counter-attack — the verdict could have far-reaching consequences.
As the Wall Street Journal reports, Kik wants to go to court against the SEC and prevent the classification of the introduced 2017 as a security token. Kik’s boss Ted Livingston said he could set an important precedent in his lawsuit and described the US Securities and Exchange Commission’s course as “completely flawed.”
Kik vs SEC: “ICO regulation hurts the economy”
In essence, the dispute is about the legal assessment of ICOs. The regulators usually regard ICOs as securities — and set high legal barriers to better protect investors from the often risky crowdfunding models. The companies that go to the market with ICOs want to circumvent this and therefore refer to the tokens as utility tokens.
If an American civil judge determines that Kik’s ICO wasn’t a securities offering the ruling could, therefore, have far-reaching consequences not only for Kik as a single company but for the entire crypto industry. If Kik succeeds in the lawsuit, other companies could follow suit and challenge the legal rating of ICOs as a security token. This, according to Kik leader Livingston, would give the entire crypto industry a “much-needed boost in innovation and boost the economy.”
US MPs want to overturn regulation of ICOs
Whether the civil suit of Livingston succeeds can not yet be foreseen. However, voices are increasing that criticize SEC’s strict regime. This culminated in late December 2018 in the “Token Taxonomy Act” by US Congressmen Warren Davidson and Darren Soto. The proposed law stipulates that stock exchange regulators may not classify every ICO as security. The aim is to protect the US economy from over-regulation and ensure the country’s leading role in the crypto sector.
Meanwhile, the SEC is increasingly harsher against ICOs. In recent months, the stock exchange supervision against hundreds of companies and sent corresponding summonses. SEC chairman Jay Clayton is quoted as saying, “I believe every ICO I’ve seen is a security.”
Author: Marko Vidrih
Image via Shutterstock
Before moving on, make sure to press follow, leave a clap or 46, share today’s highlight and if you missed the last article, click here.
Read about the Altcoin Magazine Mastermind Event here.
The purpose of ALTCOIN MAGAZINE is to educate the world on crypto and to bring it to the hands and the minds of the masses.