The SEC’s Recent Rulings Are More About Exchanges Than ICOs
Noelle Acheson is a member of CoinDesk's product team and a veteran of company analysis.
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With the two ICO issuers not listed on the stock exchange, the market collapsed in the SEC's settlement last week, meaning significant implications.
Let's look briefly at what happened before we knew it.
Last week, the SEC said the first case of reaching an agreement with AirFox and Paragon was not purely enrollment, not fraudulent activity. In a peculiar overreaction, the market seemed to assume that ICO is now over. This is different from the fact. "Over" (finally!) is an exaggerated hype about the business plan following the "me too" model and the token structure without ICO.
A new, more realistic and constructive phase has begun.
Earlier this month, a SEC executive said the agency plans to release the "General English" guidelines, not the CAPTCHA when the token is secure. Analysts are investigating a follow-up official statement summarizing recent rulings. They did not find it.
What seems to have been largely overlooked is that this statement focuses on password exchange. In the short term there is a greater impact on this sector.
Last week, the SEC announced an agreement with the founder of EtherDelta, a "decentralized exchange" for ethereum-based tokens deliberately charged with violating securities laws by registering the platform with the SEC or not operating duty-free. This was the SEC's first enforcement action to exchange tokens that failed to register.
In the statement, the SEC explains exactly what is considered an "exchange" and where the token trading location should register in all situations where the token can be changed on the platform.
Do you remember the report on the password exchange of the New York State Attorney General (OAG) a few months ago? In the introduction, "The currently active virtual asset trading platform is not registered under state or federal securities or commodity laws." The SEC and OAG are now two very different regulatory bodies. Other remittances and methods. But the goal is the same to protect investors.
The OAG report points out that digital asset platforms can pose additional risk to investors. Token buyers and sellers can trade directly, while traditional deals deal with the public through an additional buffer in the broker-dealer. In the password world, the platform is usually a trading place and a broker-dealer. I can guess because the regulator can focus on the intermediary even though there are more reasons.
An important detail is that the SEC has not yet prosecuted transactions. EtherDelta was not an agreement, and the founder sold the business last December.
It would therefore be interesting to see what information is revealed in the first case raised against the trading platform for registration failures, and whether to see a password exchange that voluntarily surveys the investigation.
When this happens, we can not say it does not happen, and we have to welcome development.
Market interest seems to be focusing on ICO follow-up due to the inevitable security enrollment costs, and it is a big complaint that many investors will end up losing the already issued tokens that eventually disappear. Shock is more dramatic than meaningful.
Exchange registration, on the other hand, has a greater impact on future encryption assets. In some business models, there will be upheavals, significant additional costs for compliance and paperwork, and sectoral focus.
But more importantly, it strengthens the oversight of intermediaries, so it can work with regulators and agencies to increase clarity and investment in asset classes.
SEC image via Shutterstock
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