In 2017, the ICO cryptocurrency space started buzzing, where Initial Coin Offerings were first introduced as a sort of a public offering for the Bitcoin crowd. Amid the buzz, many crypto companies rushed to cash in by selling their digital tokens to fans and investors. Now, one SEC commissioner is touting a plan that would permit ICO sales as long as they comply with certain rules.
Anyways, many feared that consumers were being fleeced, which is why the Securities and Exchange Commission (SEC) decided to step up and declared that ICO cryptocurrency projects amounted to an illegal sale of securities. This is why the cryptonews showed that SEC made these offerings illegal.
As we hinted above, we are talking about the SEC commissioner Hester Pierce known as the “Crypto Mom”, who proposed a plan at one blockchain conference in Chicago which will create a “safe harbor” that would give digital token projects three years to show that the tokens they issue are not securities.
In an interview with a media outlet, Pierce said that her fellow commissioners have legitimate concerns about the potential for fraud with token offerings. However, she says that the guardrails she has proposed would protect investors and foster innovation.
As the SEC commissioner noted, companies would have to file a notice documents with the SEC’s online Edgar system. If the proposal is adopted by the SEC, it would address complaints by crypto supporters that the agency is stifling innovation in financial technology and pushing entrepreneurs to leave the US for places where there is a more favorable crypto regulation climate (such as Asia or Switzerland).
“If adopted, the proposed safe harbor could be the most groundbreaking development for the U.S. cryptocurrency market to date,” said Catherine Coley, who CEO at the Binance US exchange. “In the long run, it will help bring more Americans into digital asset trading and foster greater network participation.”
Pierce’s plan, however, could also open the door to the sort of speculative excesses and rampant fraud which took place during the 2017 cryptocurrency bubble. According to an analysis of 1,450 ICO cryptocurrency offerings in early 2018, even 271 of them contained red flags such as plagiarized investor documents or fictional executive biographies.
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