SEC Releases Updated ICO Guide: Silver Lining in the Cloud for the Token Sale Industry?

The Securities and Exchange Commission (SEC), the US securities regulator, has grabbed crypto headlines recently for reasons more negative than positive. That being said, the regulatory body’s actions are viewed with a lot of interest globally, as the broad feeling in the market is that a positive move from them could be a trigger for a bullish cryptocurrency market and accelerated mainstream adoption.

Earlier this week, the regulatory body took to Twitter to reiterate its updated guidelines on Initial Coin Offerings (ICOs). The SEC has a dedicated section for ICOs on its official website and remains the most easy-to-understand and accessible guidelines it has released till date. The guidelines have listed five key aspects of ICOs for all stakeholders. In addition, the SEC has also listed pointers for investors as well as market professionals which includes securities lawyers, accountants and consultants, among others.

SEC Take: Five Things You Need to Know about ICOs

The SEC has summarised five key aspects of ICOs on its website in an extremely simplified fashion:

· ICOs can be securities offerings.

· They may need to be registered.

· Tokens sold in ICOs can be called many things.

· ICOs may pose substantial risks.

· Ask questions before investing.

These guidelines clearly indicate that the SEC is not on a singular mission to hunt down ICOs. It is a recognition of the fact that the regulator considers ICOs as a legitimate way to raise capital and participate in investment opportunities. All it wants is that token issuers should play by the rules.

We have always maintained that if regulations can clean up the system by pointing out the risks and punishing the scammers, it will boost the health of the token sale market in the long run.

Notes for Market Professionals and Investors

The SEC has also issued advice to market professionals in the space. They have asked them to exercise caution before promoting token sales and determine whether securities laws apply to these actions. The same is expected of operating systems and platforms as well. They also need to ensure that the investor interests are paramount when dealing with any token sale. Moreover, the SEC has also said that any platform operating as an ‘exchange’ and facilitating the trading of digital assets that are securities, also needs to register with the agency.

Investors, on the other hand, are being encouraged to learn more about ICOs before investing. The SEC has asked them to keep in mind that tokens are sold and traded internationally and the risks are amplified as a result. They have also asked investors to be cautious if an opportunity sounds ‘too good to be true’. Lastly, they have also informed investors that if an entity calls itself an exchange, it does not necessarily mean that they are regulated or meet all the required standards.

Is SEC Warming Up to ICOs?

After months of ambiguity from the SEC, it seems that the securities regulator is finally ready to play a positive role in the ecosystem. The clear and straightforward guidelines will greatly help genuine token issuers wade through the complex US token sale market and its legal requirements. As more Securities Token Offerings (STOs) come into the market, it may trigger the next wave of investments from retail investors who will feel more confident about investing in these regulated avenues.

The recent success of the BitTorrent ICO shows that there is still a lot of appetite for token projects among retail investors. The updated ICO guidelines from SEC, therefore, must be seen as a silver lining in the cloud by token issuers.