The opinions on initial coin offerings are very different all over the world. More specifically, there are a lot of proponents and opponents in this regard. One former SEC regulator isn’t a big fan of this industry whatsoever. In fact, Joseph Grundfest claims this industry is a notorious violation of federal securities law. Not the most positive of statements whatsoever, but it’s not exactly surprising either.
No one will be surprised to hear regulators don’t take kindly to ICOs. This has been the case for quite some time now. Nor will it change in the future, by the look of things. In the US, the SEC gets hammered with requests to regulate this nascent industry. That is easier said than done, although official guidelines are being drafted as we speak. Former regulator Joseph Grundfest feels these ICOs violate securities laws and need to be abolished. It is certainly true this new way of raising money has attracted plenty of attention worldwide.
The Future of Initial Coin Offerings is Uncertain
Surprisingly, the current SEC regulators may not see things the same way. We won’t know for sure until the official guidelines are presented to the public. With startups raising several billion through initial coin offerings this year, there is a genuine interest in this business model. However, most of the projects using this method have nothing to show for it. In fact, it is generally assumed 90% of the projects will ultimately fail. Not a positive outlook, that much is evident.
Joseph Grundfest comments on initial coin offerings as follows:
“We’re waiting to see a whole bunch of enforcement actions in this space, and we wonder why they haven’t happened yet. I hope what they are doing is planning on a sweep of 50 I.C.O.s.The most obvious way for regulators to go after these ICOs is by labeling them as securities. Additionally, these projects need to be punished for not registered with the authorities in the first place.”
How all of this will play out, remains to be determined. The vast majority of initial coin offerings claim they are not securities. However, the opinions on this front are rather divided as well. Some companies effectively promise a return on investment and give voting rights to token holders. At the same time, most tokens are bought in the hopes of financial gain. This has hindered the growth of this industry throughout the past few months. Whether or not the SEC will regulate ICOs in a negative manner, remains to be seen.
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