Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

SEC tightens the noose on ICO-funded startups

decryptmedia.com

Post reply on HN
Print view View original

1–10 of 164 posts

Re: SEC tightens the noose on ICO-funded startups

#4

Post by CPLX »

> All of this SEC action may sound like very bad news for ICOs, but many in the industry have a more optimistic take: regulatory clarity will bring growth

It will be an interesting test I suppose. If ICO’s are in fact a novel technology that offers some kind of advantage, then this statement will be correct.

If the entire and total value of ICO as a concept was that it was a means to sidestep existing regulations by pretending they didn’t exist, then this statement will prove laughable.

Personally, I lol’d

Re: SEC tightens the noose on ICO-funded startups

#5

Post by wmf »

CPLX wrote: post #4

> All of this SEC action may sound like very bad news for ICOs, but many in the industry have a more optimistic take: regulatory clarity will bring growth It will be an interesting test I suppose. If ICO’s are in fact a novel technology that offers some kind of advantage, then this statement will be correct. If the entire and total value of ICO as a concept was that it was a means to sidestep existing regulations by…

I was really pessimistic about security tokens because no exchange could legally trade them, but now a few exchanges are getting certified so it may be possible to dump these tokens. How many buyers there will be is still in question.

Re: SEC tightens the noose on ICO-funded startups

#6

Post by JumpCrisscross »

Cooley's invention of the Simple Agreement for a Future Token (SAFT) [1] was genius. Not only did they earn fees on selling people the boondoggle, they'll also cash in on defending every company, and every employee at said company, who unlawfully sold these securities.

[1] https://saftproject.com/static/SAFT-Project-Whitepaper.pdf

Re: SEC tightens the noose on ICO-funded startups

#7

Post by gfodor »

The "utility token" meme was hilarious in the community basically talking itself into the idea that the SEC was going to write a bunch of new laws and/or interpret the existing ones in the most favorable light to those raising ICOs. Playing with fire.

Re: SEC tightens the noose on ICO-funded startups

#9

Post by seibelj »

The great hope of the JOBS act was to allow unaccredited ("mom and pop") investors to get exposure to early-stage startups, in a safer way, so that the huge gains went to average people instead of well-connected rich people and VC's.

The problem currently with crowd-funded securities offerings is the overall cost of capital (legal and regulatory), lack of liquidity post-raise, and that most of the good opportunities are scooped up by hungry VC's chasing returns in a fast money, low-interest environment. When the world is awash in easy capital, crowdfunding is simply too much of a hassle for solid companies.

In comes ICO's. It fixed a lot of the issues with crowdfunding. Low cost to start (just deploy a smart contract), instant liquidity, and global capital raising. Obviously there are tons of issues (breaking securities laws, sketchy companies, bubble mentality, and why actually do any work when you already have the money, among many others). But this shows that demand for small seed-stage companies is there.

The recent JOBS 3.0 act[0] will make 2 important changes to merge crowdfunding and ICO's. One is the change to accredited investor laws to allow people to prove investor competence without meeting arbitrary income / asset requirements. This was to solve the paradox of twenty-something MBA's on Wall Street giving professional advice on investments to wealthy people without they themselves being able to invest.

The second important change is to create "venture exchanges", which have been theoretically possible before, but have never been created. This will provide liquidity to early-stage startups at new regulated crypto exchanges like Coinbase, Poloniex, etc. I believe that blockchain, at a bare minimum, enforces standard protocols. Whether security trading needed blockchain or not to have protocol standardization accomplished is a separate argument, but either way the technology encouraged and allowed it to happen organically. Strict protocol enforcement of assets (ERC20, etc.) allows crypto exchanges all over the world to inter-operate, and allows securities to be traded much more freely all over the world as each country's crypto exchanges match their rules with local security laws. This will allow offerings based in the US to be bought and traded legally in Japan, South Africa, the EU, etc. It will also allow smaller companies to raise capital more cheaply by tapping into a global pool of investors.

[0] https://www.dandodiary.com/2018/07/articles/securities-laws/...

Post reply on HN