The Wall Street Journal is reporting (pay link) that the Securities and Exchange Commission (SEC) has issued “scores of subpoenas and information requests” regarding digital tokens (aka Initial Coin Offerings, or ICOs).
That regulators are starting to look into this market shoudn’t come as a surprise. The US government doesn’t move fast, but regulators have been giving messages regarding ICOs (and they’ve generally been, “You need to comply with securities laws”) for some time.
As someone involved in the poker industry before “Black Friday”, this has all the signs of a repeat performance (except in the world of cryptocurrency rather than online gambling). Before Black Friday US government officials said that online gambling was generally illegal (to be offered). The SEC sent a release in August 2017 on ICOs; the implication was that some involved market manipulation and other illegal activity. The Commodities Futures Trading Commission (CFTC) has also sent a release. And the chairs of the SEC and CFTC wrote an op-ed in the Wall Street Journal in January. An excerpt:
Market participants, including lawyers, trading venues and financial services firms, should be aware that we are disturbed by many examples of form being elevated over substance, with form-based arguments depriving investors of mandatory protections…The CFTC and SEC, along with other federal and state regulators and criminal authorities, will continue to work together to bring transparency and integrity to these markets and, importantly, to deter and prosecute fraud and abuse…Distributed ledger technology may in fact be the next great disruptive and productivity-enhancing economic development. If history is any guide, DLT is likely to be followed by many more life-changing innovations. But we will not allow it or any other advancement to disrupt our commitment to fair and sound markets.
Tags: Bitcoins