And by "tightens the noose", they mean, "Advise to follow existing securities law, like everyone else".
SEC tightens the noose on ICO-funded startups
11–20 of 164 posts
Re: SEC tightens the noose on ICO-funded startups
#12They need to create new regulation, not cack-handidly apply old regs to entirely different technology
The regulation is fine. It's just that it's not always easy to predict how it will be applied since the SEC behaves in some very strange ways when it comes to ICOs.
A lack of precedent makes this the biggest challenge. New regulation would have the same problems.
Re: SEC tightens the noose on ICO-funded startups
#13Cooley'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
For anyone new to SAFT, there's a decent resource here https://litepaper.com/resources/saft
I think SAFT was inevitable. The sheer volume of cash dumped into crypto in 2017 - taking the total to what $6 billion - meant that this Wild West environment was due a regulatory shock. It's good to see that at least people had already preempted and created an elegant solution.
Re: SEC tightens the noose on ICO-funded startups
#14They need to create new regulation, not cack-handidly apply old regs to entirely different technology
Why do they? There's nothing special about an ICO, other than it's "on a computer". When it comes to the concept of investing, they're not doing anything new.
Re: SEC tightens the noose on ICO-funded startups
#15The 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…
> 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.
It’s worth noting that absolutely nobody is confused about there being demand for highly speculative investment in small sketchy seed stage companies.
That demand has been around, literally, for hundreds of years. The entire point of this category of securities laws is to prevent people from meeting that demand, since doing so tends to have disastrous outcomes.
Re: SEC tightens the noose on ICO-funded startups
#16Cooley'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
Isn't this just an interpretation of the law? Yes, the SEC may try to enforce their view of the law, but is it actually the correct one?
It only takes one SAFT token company to take things to court, and have a judge rule in their favour, to basically legitimise all tokens - no?
(Note: I have no clue who is right here, but just because it's the SEC doesn't mean they are automatically right. Same applies to the IRS etc)
Re: SEC tightens the noose on ICO-funded startups
#17The 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…
Venture exchanges will have more work to do past "the protocols match" - regulators look at the security (the coin) as well as the exchange.
Re: SEC tightens the noose on ICO-funded startups
#18Cooley'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
Genius would be devising a legal framework for your clients to do an ICO legally, not expose yourself to potential liability for legal malpractice and expose your client to potential civil/criminal liability.
Re: SEC tightens the noose on ICO-funded startups
#19They need to create new regulation, not cack-handidly apply old regs to entirely different technology
Why do they? There's nothing special about an ICO, other than it's "on a computer". When it comes to the concept of investing, they're not doing anything new.
Well, tokens sold on ICO mean nothing and does not represent share of the company, or anything at all. They are just vapour.
Personally i don't think that ICOs should be banned or regulated - if anything, they are frequently done by anonymous or fake identity people and cashed out using monero, anyway.
Just explain people that they are a scam, and a crime if (unlikely) caught, just like they explained about nigerian prince scam.
Re: SEC tightens the noose on ICO-funded startups
#20> 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.
Malta have very well defined laws about ICO's on the books from November 1st, the UK and USA have been disasterously vague about guidance for what constitutes a security so far, which doesn't help anyone except the bankers.